The Palo Alto-based group estimates that its addressable market could triple over the next three years. In the midst of AI mania, this is the kind of statement that the market takes at face value.
The equipment manufacturer supplies the "plumbing" around GPUs and, since the acquisition of VMWare, the software that runs the entire infrastructure. As the saying goes, in a gold rush, it is the pickaxe sellers rather than the miners who are best placed to make a fortune.
Broadcom also has the advantage of being led by Hock Tan, who has distinguished himself as both a talented acquirer and a formidable operator. Under his leadership, the group has made more than $60bn in acquisitions over the past decade; this amount would have been much higher had it managed to get its hands on Qualcomm at the end of 2018.
After each transaction, the product catalog was drastically reduced—or "streamlined," in corporate speak—and prices rose. This did not go without causing friction with customers, who felt held hostage and extorted. The long legal battle between Broadcom and AT&T is just one example amongst many.
This uncompromising approach has been good news for shareholders. However, there are fears that in the longer term it will encourage the emergence of more open and less costly competition. The major traditional suppliers, such as Amazon and Microsoft, are not standing idly by either.
In response, Broadcom intends to position itself as a sovereign alternative to the big American cloud giants. The watchword is to give control back to data owners. This message strikes a chord because it is in tune with the times, particularly in Europe and Asia.
At the end of 2023, MarkerScreener feared that Broadcom would not make it to the end of the cycle after a frenzy of acquisitions, particularly given its then-hefty valuation.
We've seen predictions that were less off the mark: the equipment manufacturer's share price has since multiplied by 2.5, while the company continued to deliver impressive growth, both in 2024 and in the first half of 2025.
The bad news, because there is some, is that stock option expenses have literally exploded since the acquisition of VMWare, reaching truly abhorrent levels. But no matter: the market has eyes and ears only for the crazy prospects for expansion in artificial intelligence.
Broadcom is currently valued at 19 times its expected revenue for this year, an all-time record. For better or worse, the days—between 2013 and 2023—when investors valued the group as a simple network equipment manufacturer at five times its average revenue are now long gone.
