Broadcom: Identifying the Best Chips Play for AI Infrastructure Growth

The artificial intelligence revolution is reshaping data center economics. As enterprises and hyperscalers race to build out AI infrastructure, companies with the right chip technology are positioned to capture significant market value. According to Fortune Business Insights, the global AI infrastructure market will expand at a 29.1% compound annual growth rate from 2025 through 2032. Within this booming ecosystem, Broadcom has emerged as one of the best chips candidates for investors seeking diversified exposure to this secular trend.

Why Broadcom’s Custom AI Chips Stand Out

Broadcom designs custom application-specific integrated circuits (ASICs) that process AI tasks more cost-efficiently than traditional GPU solutions. While Nvidia’s data center GPUs dominate headlines and market share, Broadcom’s approach addresses a critical challenge: hyperscalers like Google and Meta Platforms are actively seeking alternatives to reduce their dependence on a single supplier. These custom chips provide exactly that escape route.

The company bundles its AI accelerators with networking switches, optical equipment, and infrastructure software—creating an integrated solution that helps tech giants expand their data centers without requiring separate purchases from multiple vendors. This comprehensive approach sets Broadcom apart from pure-play chip designers and gives it sticky, long-term customer relationships.

Financial Performance Demonstrates Momentum

Broadcom’s fiscal 2025 results (ended November 2025) revealed the power of this positioning. AI chip revenue surged 65% to $20 billion, now representing 31% of total company revenue. This growth substantially offset weaker performance in non-AI segments and infrastructure software, signaling a genuine business transformation underway.

Looking ahead, analysts project that from fiscal 2025 through fiscal 2028, Broadcom will deliver revenue growth of 38% annually and earnings-per-share growth of 47% annually. These aren’t modest expectations—they reflect confidence that the AI infrastructure build-out will sustain momentum while the company’s non-AI businesses stabilize under improving macroeconomic conditions.

Ambitious Scaling Targets and Market Expansion

Broadcom has set an audacious goal: generating $60 billion to $90 billion in annualized AI chip revenues by the end of fiscal 2027. Most of this growth will come from just three hyperscale customers, illustrating both the concentration and the magnitude of opportunity. Beyond chips, the company plans to capture additional share in networking and optical equipment serving the broader AI infrastructure market.

The infrastructure software division plays a critical role in this strategy. While chip manufacturing is inherently cyclical and vulnerable to demand swings, software revenue provides ballast and stability. This counter-cyclical balance reduces overall business volatility and creates a more resilient earnings stream.

Strategic Acquisitions Shape Long-Term Positioning

Over the past decade, Broadcom has aggressively diversified through acquisitions. The purchases of CA Technologies, Symantec’s enterprise security division, and the cloud software giant VMware transformed the company from a narrowly focused chipmaker into a diversified technology player. Management signals that this acquisition strategy will continue.

This track record suggests Broadcom management understands that winning in AI infrastructure requires more than just chip design—it demands ecosystem-level solutions. Each acquisition expands both Broadcom’s addressable market and its ability to embed itself deeper within customer infrastructure stacks.

Valuation and Dividend Profile

Trading at 30 times next year’s projected earnings, Broadcom appears reasonably valued relative to its growth trajectory and the competitive advantages it has built. For income-focused investors, the forward dividend yield of 0.8% won’t excite, but the low 49% payout ratio demonstrates management’s confidence in reinvesting for growth while preserving flexibility for future distributions.

Weighing the Investment Case

Broadcom represents a strategically differentiated way to participate in the best chips and AI infrastructure opportunity. Unlike pure play chip stocks, Broadcom’s diversified portfolio—spanning custom ASICs, networking, optical, and software—provides multiple levers for value creation. The company’s relationships with hyperscalers, ambitious revenue targets, and track record of value-accretive acquisitions support the bull case.

That said, investors should acknowledge the concentration risk: much of the near-term growth depends on three major customers. Additionally, the company doesn’t generate the headline-grabbing returns of some AI pure plays.

For investors seeking exposure to the AI infrastructure buildout through a best chips candidate with multiple growth engines and diversified revenue streams, Broadcom merits serious consideration as part of a technology-focused portfolio.