Broadcom's Historic Stock Performance and Recent Split

The U.S. economy has a rich history of producing world-leading companies, and Broadcom (NASDAQ: AVGO) is positioning itself to become the next stock to reach a $1 trillion market capitalization. The article highlights:

• United States Steel became the first $1 billion company in 1901
• General Motors was the first $10 billion company in 1955
• Apple became the first $1 trillion company in 2018, thanks to the iPhone's success
• Broadcom recently executed a 10-for-1 stock split, increasing shares and reducing the price per share tenfold

Broadcom's AI Focus Across Multiple Fronts

Broadcom has placed a heavy emphasis on artificial intelligence (AI) across its organization to capitalize on this technological revolution. The company's AI efforts include:

• Semiconductor data center accelerators for AI development
• Networking equipment like Ethernet switches for efficient data flow in AI infrastructure
• Integration of AI into Symantec's cybersecurity products, such as the SymantecAI chatbot
• VMware's software layer for optimizing data center infrastructure and resource utilization

Broadcom's Revenue and Growth Potential

Broadcom expects to generate $51.5 billion in total revenue for fiscal 2024, with $12 billion attributable to its AI businesses, highlighting the significant momentum in this emerging space.

Broadcom's Path to the $1 Trillion Market Cap

With a current market capitalization of $761 billion, Broadcom's stock needs to gain 31.4% to reach the $1 trillion milestone. The article outlines the following factors:

• Broadcom currently trades at a price-to-sales (P/S) ratio of 16, higher than its 5-year average of 8.7
• If the P/S ratio remains constant, Broadcom needs to grow its annual revenue by 31.4% to justify a $1 trillion valuation
• Wall Street expects Broadcom's revenue to grow by 17.2% in fiscal 2025 and potentially more in fiscal 2026
• Maintaining a premium P/S ratio over the long term may add years to Broadcom's quest for the $1 trillion club

Broadcom's Competitive Positioning

The article compares Broadcom to other tech giants like Nvidia, Microsoft, Amazon, Meta Platforms, and Alphabet, which have already reached the $1 trillion market capitalization milestone.

Long-Term Outlook for Investing in Broadcom Stock

While Broadcom is positioned to be a "spectacular stock" during the AI revolution, the article recommends a very long-term outlook (perhaps a decade or more) for investors buying the stock today. This extended timeframe will allow the company to grow into its current valuation.

Motley Fool Stock Advisor Recommendation

The article includes a promotion for the Motley Fool Stock Advisor service, which recommends what they believe are the 10 best stocks for investors to buy now, with Broadcom not being one of them. The service claims to have outperformed the S&P 500 since 2002.