How Much More Can Broadcom Stock Rally?

Broadcom’s stock (NASDAQ: AVGO) just surged 11% on November 24, driven by excitement around its Google AI chip partnership and the success of Alphabet’s new Gemini 3 model. The stock has already more than doubled in the past year, now trading around $380. So the natural question is: what would it take to double again?

Let’s work through the math and the catalysts that could make it happen. That being said, if you seek an upside with less volatility than holding an individual stock like AVGO, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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The Math Behind a Double

Could earnings really double in three years? Yes, and here’s the straightforward path. Broadcom is sitting on roughly $60 billion in trailing revenue with an exceptional 50%+ adjusted net margin and 32% GAAP net margin. That means every dollar of new revenue converts into about 50 cents of profit — a remarkable characteristic that creates exponential earnings growth.

If revenue climbs to $120 billion by 2028 (driven primarily by AI chips and VMware subscriptions), we’re looking at adjusted EPS rising from around $6.29 today to over $12. That near-doubling of earnings is the foundation.

But earnings growth alone doesn’t move stocks dollar-for-dollar. What about valuation?

Exactly right. The stock currently trades at over 60x trailing earnings — a premium multiple that reflects Broadcom’s elite positioning. If that multiple holds at 60x, then $12 in EPS gets you to a $720 stock price. And if the AI story accelerates further? That multiple could expand, pushing the stock even higher. Check out our dashboard on AVGO Stock Valuation Ratios.

What Could Actually Drive That Revenue Growth?

The Gemini 3 catalyst is interesting, but is it really a game-changer?

It’s a validation signal more than anything. Google’s Gemini 3 success demonstrates that AI models are moving from lab experiments to production deployment at scale. When Alphabet rolls out advanced AI across search, cloud, and consumer products, it needs massive inference capacity. That’s where Broadcom’s custom TPU chips come in.

Here’s what matters: inference is now the growth engine. Training AI models was the first wave — building the models requires massive compute clusters. But inference — actually running those models billions of times per day for real users — is where the sustained, long-term demand lives. Broadcom dominates this phase because its custom silicon and networking are optimized for high-volume, power-efficient inference workloads.

How big could this inference opportunity get?

Consider that Broadcom already has four confirmed hyperscale customers, including Google and Meta, for custom AI chips. As these companies scale their AI services, they’ll need continuous generations of faster, more efficient chips. The technical moats are significant — designing custom accelerators requires multi-year engineering partnerships and deep integration. Once you’re in, you’re sticky.

The recent analyst upgrades aren’t just reacting to a single data point. They’re recognizing that Broadcom sits at a critical chokepoint: hyperscalers need custom silicon to differentiate their AI platforms, and Broadcom is one of the few companies with the expertise to deliver at scale.

Beyond AI Chips: The Networking Advantage

Aren’t chips only half the story?

Yes, and this is where Broadcom’s positioning gets really interesting. Building an AI cluster isn’t just about processors —you need ultra-high-speed networking to connect thousands of accelerators. Broadcom’s Tomahawk Ultra switches can link up to 1,024 accelerators in a single rack, far exceeding competitors. These networking chips are essential infrastructure, and they’re shipping in volume now.

As hyperscalers build larger AI clusters (some approaching 100,000+ GPUs), the networking fabric becomes even more critical. Broadcom’s lead in co-packaged silicon photonics — technology that moves data faster and more efficiently — gives it a sustained competitive edge in this exploding market.

The VMware Wild Card

VMware seems almost forgotten in the AI narrative. Does it matter?

It matters enormously for the doubling thesis because it provides a second, independent growth engine with very different characteristics. While AI is high-growth but concentrated, VMware offers stable, recurring software revenue with incredible margins.

The integration is ahead of schedule. VMware, which is part of the infrastructure software segment, saw its revenue grow 17% year-over-year to $6.8 billion in Q3, and Broadcom is successfully migrating customers to subscription models. This isn’t just top-line growth — it’s converting perpetual licenses into predictable annual recurring revenue with minimal incremental costs. The cash flow from VMware will be massive and durable, supporting both reinvestment in AI R&D and shareholder returns.

How does that help the stock double?

It de-risks the story. If AI chip demand were Broadcom’s only driver, any slowdown would crater the stock. But with VMware generating steady cash flow, Broadcom can weather volatility in semiconductor cycles. That combination of high-growth AI and stable software is precisely what justifies a sustained premium multiple.

The Risks You Can’t Ignore

What could derail this?

Three things that warrant caution.

1. First, customer concentration. Broadcom’s AI revenue comes from a handful of hyperscalers. If even one customer slows spending or brings more chip design in-house, it impacts numbers significantly. These partnerships are deep, but they’re also concentrated.
2. Second, competition is intensifying. Marvell is aggressive in custom silicon (See – Marvell Stock: Overlooked AI Winner?). NVIDIA isn’t standing still. Related – The $5 Trillion AI Risk Sitting in the Taiwan Strait. And every hyperscaler is investing in its own chip teams. Broadcom’s moats are real, but they’re not impenetrable. Any sign of share loss or pricing pressure would hurt both earnings and the valuation multiple.
3. Third, this stock is volatile. Broadcom has seen 50% drawdowns during broader market corrections. It dropped harder than the S&P 500 in both the COVID-19 crash and the 2022 inflation selloff. If we hit a recession or a tech spending freeze, Broadcom will feel it acutely.

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The Bottom Line: Can It Double?

So what’s the realistic case here?

If Broadcom executes on AI — securing more customers, ramping Tomahawk Ultra volumes, and maintaining its inference advantage — while simultaneously scaling VMware’s recurring revenue, the path to $700+ over the next few years is credible. The Gemini 3-driven rally shows the market is watching these catalysts closely.

The math works: near-doubling earnings plus a sustained 60x multiple gets you there. And if AI infrastructure spending exceeds expectations, or if VMware margins expand faster than anticipated, the stock could push past $800.

Is it worth the risk?

For investors with a three-year horizon who can stomach 30-50% drawdowns, Broadcom offers a genuine shot at doubling. The company sits at the intersection of two massive trends — AI infrastructure and cloud software subscriptions — with best-in-class execution and profitability.

But you’re buying volatility alongside growth. This isn’t a steady compounder; it’s a high-beta play on AI capex. If that investment cycle stalls, or if key customers pivot, the downside is real. The question isn’t whether Broadcom can double — it’s whether you can hold through the inevitable turbulence to get there.

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