Two AI Giants Positioned to Skyrocket: Here's Why These Could Be Your Next Winners

The AI infrastructure boom is real, and Morgan Stanley estimates we’ll see over $3 trillion in spending on AI chips and data centers in just the next three years. That’s not hype—that’s capital flowing into the sector right now. But which companies are actually positioned to capture this wave?

Broadcom: The Semiconductor Powerhouse Riding AI Demand

Broadcom (NASDAQ: AVGO) is quietly becoming indispensable in the AI infrastructure stack. The company just reported a staggering 63% year-over-year surge in AI-related product revenue last quarter, and CEO Hock Tan’s recent statements at a Goldman Sachs technology conference emphasized they’re seeing “robust demand for AI compute” with no signs of slowing.

Here’s what makes Broadcom special: they’re part of an extremely limited group of semiconductor suppliers actually meeting the demand for custom AI accelerators—the chips that power data center AI operations. This scarcity creates pricing power and margins most tech companies can only dream of.

But it’s not just accelerators. Broadcom’s Tomahawk 6 and Jericho 4 networking switches are becoming critical infrastructure. These aren’t optional upgrades; they’re essential for connecting massive clusters of AI chips to process enormous datasets. That’s recurring revenue potential built into the fabric of AI infrastructure.

The numbers speak for themselves. Broadcom’s trailing 12-month free cash flow has doubled over five years and currently sits at $25 billion. Analysts are projecting 37% annualized free cash flow growth—that kind of trajectory could easily drive the stock price to double by 2029-2031.

Microsoft: The Cloud Backbone of Enterprise AI

While Broadcom powers the hardware, Microsoft (NASDAQ: MSFT) is building the software and cloud infrastructure that runs on top of it. The company isn’t just surviving the AI revolution; it’s orchestrating it.

Microsoft’s cloud revenue hit $49 billion last quarter, up 26% year-over-year, and more importantly, it now represents roughly two-thirds of total business revenue. This concentration isn’t a risk—it’s a cash machine. Azure, their enterprise cloud platform, accelerated even faster with 40% year-over-year growth, positioning it among the fastest-scaling cloud providers globally.

What caught our attention: Microsoft’s $392 billion in remaining performance obligations with a weighted average duration of just two years. Translation—the cash is coming sooner rather than later. Enterprises aren’t signing vague, long-term deals anymore; they’re committing to near-term cloud and AI infrastructure builds, which means higher near-term revenue realization and healthier margins.

CEO Satya Nadella framed it perfectly: Microsoft is building “a planet-scale cloud and an AI factory.” That vision is translating into real free cash flow growth, with analysts projecting 23% annualized growth. Even accounting for potential valuation compression from its current 45x price-to-free-cash-flow multiple, that’s still a realistic path to doubling by 2030.

The Takeaway: Different Plays, Same Tailwind

Broadcom captures the hardware/semiconductor narrative, while Microsoft controls the cloud infrastructure software layer. Both are non-discretionary pieces of the AI infrastructure buildout. Revenue growth is accelerating, free cash flow is expanding, and competition remains limited. That’s the environment where stocks genuinely can double.