Prediction: Broadcom Stock Could Surge by 100% in the Next 3 Years

Geoffrey Seiler, The Motley Fool

Sun, Apr 27, 2025, 5:25 PM 6 min read

When looking at stocks with some of the strongest upside potential over the next few years, Broadcom (NASDAQ: AVGO) tops the list. The chipmaker has been caught in the recent market sell-off, down around 20% in 2025 as of this writing. However, the stock is still up more than 45% over the past year.

Let's look at why Broadcom's stock could double, or more, over the next three years.

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Broadcom operates in two segments: semiconductor solutions and infrastructure software.

Originally focused solely on hardware, the company entered the software business through various acquisitions over the past few years, including CA Technologies, Symantec, and most recently VMware. With CA Technologies, the company acquired a large portfolio of mainframe and enterprise software solutions, while Symantec brought it an enterprise security business.

It biggest acquisition, though, was VMware, which it acquired in November 2023 for $69 billion. VMWare is a market leader in virtualization and cloud computing solutions. Its core virtualization product allows multiple virtual machines to be run on a single server, helping save customers costs. Meanwhile, its VMware Cloud Foundation (VCF) platform helps customers build hybrid and multicloud environments where they can manage workloads across public clouds and their own on-premise data centers.

Broadcom has set out to transform VMware by streamlining its operations and product solutions, while transitioning customers from perpetual licenses to a subscription model. At the end of its fiscal first quarter, it had transitioned 60% of its customers to a subscription model. In the process, it has also been upselling customers from its compute virtualization product, vSphere, to its VCF platform.

As a result, Broadcom's infrastructure software revenue climbed 47% to $6.7 billion last quarter and it forecast the segment to grow by 23% in fiscal Q2. Its software businesses should be a solid contributor moving forward, especially as enterprise customers start to turn to hybrid cloud environments to run artificial intelligence (AI) workloads.

On the hardware side, Broadcom makes components for various markets, including wireless devices, broadband internet, and automotive. However, its two most important businesses are networking and ASICs (application-specific integrated circuits).

Within its networking business, Broadcom makes components such as ethernet switches, optical receivers, digital signal processors (DSPs), and network interface cards (NICs). These components are critical parts of AI infrastructure.