Broadcom: Among the Best Chips Plays for AI Infrastructure Expansion

As enterprises worldwide accelerate their data center modernization to support artificial intelligence applications, the demand for specialized silicon has reached unprecedented levels. According to Fortune Business Insights, the global AI infrastructure market will expand at a compound annual growth rate of 29.1% through 2032—a trajectory that has attracted both established chipmakers and emerging competitors. Among these players, Broadcom stands out as one of the best chips companies positioned to capitalize on this secular shift, though understanding why requires looking beyond its headline numbers.

The AI Infrastructure Boom Demands Next-Generation Chip Solutions

The rise of AI workloads has fundamentally reshaped data center economics. Hyperscale operators—including Alphabet’s Google and Meta Platforms—face escalating infrastructure costs as they roll out AI-powered services. While Nvidia’s data center GPUs dominate headlines, custom-designed silicon offers a compelling alternative. Broadcom manufactures application-specific integrated circuits (ASICs) tailored for AI inference tasks, which can deliver superior cost efficiency compared to general-purpose GPUs at scale.

This differentiation explains why major cloud providers are actively diversifying their chip suppliers. By integrating these custom ASICs with complementary offerings—networking switches, optical interconnects, and infrastructure software—Broadcom provides a comprehensive solution that addresses the full stack of data center expansion challenges. It’s this integrated approach that positions best chips suppliers like Broadcom differently from point-solution providers.

Broadcom’s AI Chip Business: Rapid Growth With Strategic Advantages

The company’s fiscal 2025 results (ended November 2025) underscore the explosive momentum in its AI division. AI chip revenue surged 65% year-over-year to $20 billion, now representing 31% of total revenue. This acceleration comes as the company’s traditional non-AI semiconductor and software businesses mature, creating a natural transition toward higher-growth segments.

Looking ahead, Broadcom’s management projects $60 billion to $90 billion in annualized AI chip revenues by the end of fiscal 2027. Analysts tracking the company expect blended revenue and earnings-per-share growth rates of 38% and 47% respectively from fiscal 2025 through fiscal 2028, driven by continued AI adoption and stabilization in legacy business units. Among the best chips manufacturers, few can claim such aggressive expansion targets backed by customer commitments.

The concentration of revenue among three major hyperscale customers underscores both the scale of Broadcom’s opportunity and the inherent concentration risk. However, the company’s roadmap suggests plans to broaden its customer base and geographic footprint within the AI chip market.

Revenue Diversification: Why Best Chips Need Balanced Portfolios

What distinguishes Broadcom among the best chips companies isn’t purely its AI momentum—it’s the strategic balance sheet across multiple business units. The company’s networking and optical equipment divisions complement its semiconductor business, providing recurring revenue that stabilizes earnings through cycle downturns. Additionally, its infrastructure software portfolio, bolstered by acquisitions of CA Technologies, Symantec’s enterprise division, and VMware, offers exposure to secular software trends independent of chip cycles.

This multi-unit architecture proved valuable during past downturns and positions Broadcom defensively even if AI investment growth moderates. Few pure-play semiconductor companies can claim such diversification.

Valuation and Forward Outlook: Is This Among the Best Chips to Own?

Trading at approximately 30 times forward earnings, Broadcom’s valuation sits in the mid-range among semiconductor peers and reflects its dual exposure to cyclical chips and resilient software businesses. The company maintains a forward dividend yield of 0.8% with a 49% payout ratio—conservative enough to fund substantial future distribution increases while preserving capital for acquisitions or buybacks.

The company’s acquisition strategy remains aggressive. With a track record of integrating large software and infrastructure assets, management has signaled intent to pursue bolt-on deals that expand its addressable market. In a consolidating semiconductor industry, Broadcom’s M&A capability represents another competitive advantage.

The Bottom Line: Strategic Positioning in AI’s Infrastructure Phase

Broadcom merits consideration among the best chips stocks for investors seeking exposure to AI infrastructure growth, provided they understand the specific drivers. Unlike pure semiconductor bets heavily concentrated in training chips, Broadcom benefits from the full lifecycle of AI infrastructure buildout—from specialized processing hardware to the networking and software that integrate these systems into production environments.

While the company faces competition and concentration risks warrant careful monitoring, its technical differentiation, customer diversification potential, and balanced revenue model support the thesis that best chips plays require more than just participation in AI—they require strategic positioning across multiple layers of the infrastructure stack. For investors with conviction in long-term AI adoption, Broadcom offers a more nuanced entry point than single-product-focused competitors.