You can’t stop progress, you can only hope to benefit from it.

Once upon a time, in January 1996, the oil giant ExxonMobil (NYSE: XOM) was the first stock worth 100 billion dollars. One year later Coca-Cola (NYSE:KO) had risen to 131 billion dollars and there were three stocks above the 100 billion dollar mark. At the end of the 20th century, this club had 19 members and Microsoft (NASDAQ:MSFT) With a market share of 604 billion US dollars, it was the leader.

These days, the market is exploring a different scale. The first trillion-dollar stocks appeared in 2019. A coronavirus pandemic, an inflation crisis, and a boom in artificial intelligence (AI) later, six companies have crossed the trillion-dollar mark. Soon you will see many, many trillion-dollar market caps. The turn of the millennium is not long ago, and the group of 100 billion-dollar stocks is already 120 names strong.

I am pretty sure that the guru for network and connectivity semiconductors Broadcom (AVGO -0.25%) will join the trillion-dollar society before 2030. In fact, it could happen in just a few years.

Broadcom’s trillion-dollar prospects in numbers

Frankly, Broadcom has an easy path to the $1 trillion mark. With a market cap of $730 billion, the company is already one of the biggest names in the market and just needs a little push to cross that finish line.

From a purely mathematical perspective, there are several reasons to believe that Broadcom will achieve this goal – and soon.

• Broadcom stock has gained an average of 40% annually over the past five years. The stock would need just one more year of this rapid growth to reach $1.022 trillion.
• Too optimistic? Okay. The total return of the S&P500 (^GSPC 0.20%) The market index recorded a compound annual growth rate (CAGR) of 15% over the same period. At this pace, Broadcom would reach $1.1 trillion by August 2027.
• I can drop the annual earnings a little further to see what happens. To reach a $1 trillion market cap in four years, Broadcom would need a compound annual growth rate of nearly 11%. If we move the goalposts to 2029, 8% per year would be enough. And finally, Broadcom only needs a 6% compound annual growth rate to just about cross the trillion dollar mark in the summer of 2030.

Six percent is well below the stock market’s long-term average and well behind Broadcom’s proven growth habits. By any means necessary, and perhaps with one or two spectacular acquisitions, Broadcom should be able to reach my trillion-dollar target long before 2030.

Broadcom’s growth drivers

That’s the basic math. What about the practical side of Broadcom’s growth potential?

The company has a lot of balls in the air. Connected devices are everywhere these days, like yellow cabs in New York or platform shoes at the disco. I mean, they’re everywhere – phones, cars, washing machines, pedometers and dog collars are sending data to the cloud, and I’m only scratching the surface with this list. As the leading supplier of the chips that make those connections, Broadcom’s growth seems unstoppable.

And that’s just the foundation of this company’s growth story. Broadcom is also discussing AI chip designs with ChatGPT maker OpenAI and TikTok owner ByteDance. Custom AI processors tend to have lower profit margins, but could also be a solid source of revenue if large customers continue to leverage Broadcom’s expertise.

Valuation concerns and market risk

Valuation concerns represent the biggest potential obstacle in our path.

Broadcom stock is trading near multi-year highs in terms of price-to-earnings, P/E, or P/S ratio. Bears can argue that Broadcom’s AI prospects and recent revenue growth are already factored into share prices. If the stock is perfectly priced, any misstep could result in a painful share price decline and push Broadcom further away from the dramatic trillion-dollar mark.

Value-oriented investors shouldn’t look too long at Broadcom’s highly valued stock. This is an idea for growth-oriented investors who don’t mind a high price and increased market risk as long as the company is able to grow its revenue streams over the long term.

So the road ahead could be quite bumpy depending on how the global economy and the AI ​​boom play out. Broadcom’s achievement of the trillion-dollar goal could be delayed. Still, I expect the company to hit that mark well before 2030, even if it goes through a few sharp price corrections before then. So you should check your risk appetite, maybe pick up a few Broadcom shares, and then buckle up for a rollercoaster ride to a trillion-dollar market cap – and beyond. It’s not for everyone, but it’s a promising growth investment for those who dare.