This Tech Stock Pays a Growing Dividend and Rides Every AI Tailwind. What's Not to Like?

There are a lot of great AI stocks to choose from these days, but they don’t all offer the same long-term opportunities or tap into artificial intelligence (AI) trends as Broadcom (NASDAQ: AVGO). Nor do they pay a growing dividend, as the company also does.

Broadcom is benefiting from two big AI trends, including a surge in data center demand and shift by big tech companies toward customized processors.

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And it’s likely that Broadcom’s impressive run isn’t done yet. Here’s why.

Image source: Getty Images.

How Broadcom is catching two big AI tailwinds

AI is a vast market, so let’s narrow it down to exactly how Broadcom benefits from it. First, its custom AI processors are increasingly in demand by leading tech companies to optimize their AI systems.

Broadcom’s processors can be designed specifically with a tech company’s large language models in mind, making them more efficient and boosting performance. This advantage helped its custom AI application-specific integrated circuits (ASICs) have a 140% increase in sales in the first quarter of 2026, thanks to expanding deals with Alphabet, Meta, Anthropic, and OpenAI.

The chipmaker recently announced that it has expanded its partnership with Alphabet’s Google, which keeps Broadcom designing Google’s tensor processing units (TPUs) and supplying networking components through 2031.

Broadcom’s AI-specific semiconductor revenue more than doubled in the first quarter to $8.4 billion, accounting for about 43% of its total revenue. And more good times are on the way with management estimating its AI chip revenue will reach $100 billion by 2027.

And that’s not the only AI trend benefiting the business. The company’s networking systems — mainly through its popular Tomahawk switches for data centers — are also experiencing a surge in demand as hundreds of billions of dollars are invested in data center expansion.

Broadcom’s AI networking revenue rose 60% in the most recent quarter to $2.8 billion — accounting for about one-third of all the company’s AI sales. And management believes this will continue to expand, with networking sales making up 40% of AI revenue in the second quarter.

A growing dividend ain’t half bad, either

High-growth AI stocks aren’t typically the companies you would expect to pay dividends, which is one of the ways Broadcom is unique.

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