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Prediction: These 2 Unstoppable Artificial Intelligence (AI) Stocks Will Be Worth More Than $1 Trillion by the End of 2025
AVGOBroadcom(AVGO) The Motley Fool·2025-03-23 11:00

Group 1: Market Overview - The recent market sell-off has negatively impacted several companies, including Broadcom and Taiwan Semiconductor Manufacturing, causing them to fall below the 1trillionvaluationclub[1]Bothcompaniescurrentlyholdvaluationsaround1 trillion valuation club [1] - Both companies currently hold valuations around 915 billion, but there is a strong likelihood they will return to the 1trillionmarketcapbytheendoftheyearduetofavorabletrends[2]Group2:BroadcomsAIStrategyBroadcomisheavilyinvolvedintheAIsector,focusingoncustomAIaccelerators(XPUs)andconnectivityswitches,whichareessentialfordatacenteroperations[3][4]XPUsaremoreefficientthanGPUsforAItrainingtaskswhenproperlyconfigured,makingthemastrategicinvestmentasresourcesareincreasinglyallocatedtoAImodeldevelopment[5]ThecompanyisscalingupitsinfrastructuretocreateAIclusterswithnearly1millionXPUs,whichcouldsignificantlyadvanceAIcapabilities[6]BroadcomexpectsitsAIrevenuebase,whichwas1 trillion market cap by the end of the year due to favorable trends [2] Group 2: Broadcom's AI Strategy - Broadcom is heavily involved in the AI sector, focusing on custom AI accelerators (XPUs) and connectivity switches, which are essential for data center operations [3][4] - XPUs are more efficient than GPUs for AI training tasks when properly configured, making them a strategic investment as resources are increasingly allocated to AI model development [5] - The company is scaling up its infrastructure to create AI clusters with nearly 1 million XPUs, which could significantly advance AI capabilities [6] - Broadcom expects its AI revenue base, which was 12.2 billion in 2024, to grow substantially, with a potential rise of over 10% to rejoin the 1trillionclub[8]Group3:TaiwanSemiconductorsRoleTaiwanSemiconductorManufacturing(TSMC)istheleadingchipmanufacturer,supplyingchipsforAIapplicationsandbenefitingfromBroadcomsgrowthaswellascompetitorslikeNvidiaandAMD[9]TSMCanticipatesa451 trillion club [8] Group 3: Taiwan Semiconductor's Role - Taiwan Semiconductor Manufacturing (TSMC) is the leading chip manufacturer, supplying chips for AI applications and benefiting from Broadcom's growth as well as competitors like Nvidia and AMD [9] - TSMC anticipates a 45% compound annual growth rate (CAGR) in AI-related revenue over the next five years, with overall company CAGR approaching 20% [10] - The company is set to launch 2nm and 1.6nm chip nodes in 2025 and 2026, which will improve power efficiency by 20% to 30% and 15% to 20% respectively [11] - TSMC's monthly revenue growth indicates strong business performance, with sales rising 36% in January and 43% in February, suggesting it may also rejoin the 1 trillion club by year-end [13]