If you had invested $1,000 in Broadcom stock 5 years ago, here’s how much you’d have today

The artificial intelligence (AI) arms race is in full swing. The big tech players love it Meta platforms and Alphabet spend massive amounts of capital to outperform the competition. As Alphabet CEO Sundar Pichai has said, “the risk of underinvesting is dramatically greater than the risk of overinvesting.”

Pichai must think that’s a very big risk, given that his company is on track for $50 billion in capital spending this year, the lion’s share of which goes to AI. This is great news for the companies that make that hardware. While much of the attention has been focused on Nvidiaother players also reap the rewards.

Broadcom (AVGO 2.76%) it certainly is. The company’s revenue grew more than 40% year over year in the last two quarters. CEO Hock Tan said the company expects $12 billion in AI-related hardware sales for the full year, up significantly from previous projections. Beyond hardware, the company’s recent software acquisition was a boon to the bottom line.

A $1,000 investment would have paid off

So how much would you have made on a $1,000 investment five years ago? You would have doubled your money, and $1,000 would now be worth $2,100 — not bad. Compare that to about 39% of Nasdaq Composite returned in the same time frame.

AVGO Total Return Level data by YCharts.

You might be kicking yourself for not buying stocks in 2019. I missed out too. The truth is, this will happen often in your investing career. It’s the name of the game.

The important thing is to focus on the future and look for solid companies that you believe in over the medium to long term, invest in a diverse set of them, and then be patient.