Get ready for ASIC shipments to triple with this leading AI stock

The AI infrastructure race is heating up, and Broadcom ( AVGO ) is expected to maintain its leadership as AI server computing ASIC design partner with 60% market share by 2027, according to Counterpoint Research.

As tech giants like Alphabet ( GOOGL ) ( GOOG ), Amazon ( AMZN ), Microsoft ( MSFT ), and Meta ( META ) accelerate their shift toward custom AI chips, the entire ASIC market is poised for explosive growth.

AI server compute ASIC shipments are expected to triple by 2027 as hyperscalers build massive infrastructure to support their AI ambitions. That increase is driven by rampant demand for the specialized chips that power everything from Google’s Gemini models to Amazon’s Trainium clusters and Microsoft’s Maia processors.

What makes this trend particularly attractive to investors is the structural change taking place in the industry. “The growth of internal AI server compute ASIC design is validating the era of internal custom XPU, where AI accelerators are tailor-made for special and specific workloads,” explained Counterpoint analyst Neil Shah.

As power and space constraints intensify, hyperscalers are increasingly turning to custom silicon solutions, and Broadcom is at the center of this transformation as the dominant design partner enabling it.

Broadcom is consolidating its position as a dominant player in the booming AI infrastructure market.

In fiscal 2025 (ending October), Broadcom reported AI sales of $20 billion, up 65% year-over-year (YoY).
AI revenue is expected to double in the first fiscal quarter of 2026 to over $8 billion.
Notably, CEO Hock Tan’s compensation incentives are tied to increasing AI revenue to more than $120 billion by 2030.

Broadcom has a comprehensive product portfolio in the AI data center segment. Beyond custom AI accelerators, it provides critical network components such as Tomahawk switches, digital signal processors, optical components, and PCI Express switches.

The company currently has more than $73 billion in AI-related pipeline expected to ship over the next 18 months, with $53 billion tied to custom accelerators alone. Market dynamics are shifting in Broadcom’s favor as hyperscalers adopt custom silicon solutions optimized for their specific workloads.

While Nvidia ( NVDA ) dominates the general-purpose GPU market, companies building large language models (LLMs) are turning to application-specific ICs that offer better performance per watt for their unique requirements. Broadcom has already secured five major customers for custom accelerators, and demand continues to accelerate.

Broadcom’s networking business will also benefit from this AI creation. The company’s latest Tomahawk 6 switch, capable of 102 terabits per second, has generated record orders with a backlog of more than $10 billion.

As AI clusters scale to hundreds of thousands of processors, network infrastructure becomes increasingly critical and complex, playing directly to Broadcom’s engineering strengths.

With total consolidated portfolio reaching $162 billion, and AI accounting for almost half of that figure, Broadcom looks well positioned to capitalize on the multi-year AI infrastructure build. The company expects this momentum to continue accelerating through 2026 and beyond as customers race to scale their AI capabilities.

Valued at a market capitalization of $1.6 trillion, AVGO shares are up 457% over the past three years and 2,388% over the past decade.

Analysts tracking AVGO stock’s earnings forecast growth from $63.9 billion in fiscal 2025 to $236 billion in fiscal 2030. In that period, adjusted earnings are forecast to widen from $6.82 per share to $23.37 per share.

If AVGO stock is priced at 25x forward earnings, which is below its current multiple of 33x, it should trade around $825 by the end of 2029, indicating potential upside of nearly 150% from current levels.

Out of 42 analysts covering AVGO stock, 36 recommend “Strong Buy”, three recommend “Moderate Buy” and three recommend “Hold”. AVGO stock has an average price of $455.22, up from the current price of $333.

As of the date of publication, Aditya Raghunath had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com

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