4. Broadcom Inc. (NASDAQ:AVGO)
Short Interest as % of Shares Outstanding: 1.09%
Number of Hedge Fund Holders: 130
One of the best 5G stocks to buy, Broadcom Inc. (NASDAQ:AVGO) is a leading global technology company that focuses on designing and developing a diverse range of semiconductor and software solutions. The company is deeply focused on key areas like cloud computing, data centers, networking, broadband, and wireless communications, making it a significant player in the advancement of 5G technology.
It offers a broad suite of products tailored to support 5G infrastructure, including essential 5G radio frequency components such as FBAR filters. Furthermore, its Trident 5-X12 Ethernet switch, known for being the among the first switch chips with an integrated neural network, significantly improves performance, density, and AI capabilities for 5G networks. The company also supplies wireless connectivity chips that facilitate high-speed 5G connections in mobile devices.
In Q2, 130 hedge funds had stakes worth $20.035 billion in Broadcom (NASDAQ:AVGO). Rajiv Jain’s GQG Partners is the company’s largest shareholder with $32.35 million shares worth $5.2 billion, as of June 30.
Broadcom (NASDAQ:AVGO) is seeing continued success as the demand for connected devices grows. As a major supplier of essential chips for computing and networking, it plays a crucial role in the expanding tech landscape.
In 2023, the company secured a significant multiyear agreement with Apple, focusing on the development of 5G radio frequency components, including advanced FBAR filters. The partnership strengthens the company’s position as a key provider of critical 5G technology for Apple’s devices, with production set to take place in various U.S. manufacturing and technology centers.
It’s influence extends beyond this deal, as the company is also exploring AI chip designs with famous tech giants like OpenAI and ByteDance. The company’s custom chip designs and networking semiconductors are integral to building AI systems, a sector experiencing rapid growth.
In the second quarter, Broadcom (NASDAQ:AVGO) saw its revenue from AI products hit a record $3.1 billion, which signals high demand. CEO Hock Tan projected that total AI sales for fiscal 2024 would exceed $11 billion.
Mar Vista Investment Partners, LLC stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q2 2024 investor letter:
“During the quarter, we established new investments in Broadcom Inc. (NASDAQ:AVGO) and Meta Platforms. We initiated a position in Broadcom in Q2. As a skilled aggregator, Broadcom acquires firms, streamlines their operations, and invests R&D dollars in mission critical products that generate industry leading profit margins, robust cash flows and high returns on invested capital. Its primary markets include AI accelerators targeting generative AI applications, networking & wireless semiconductors, and mission-critical infrastructure software solutions.
Broadcom is well-positioned to benefit from the rapidly expanding demand for custom AI accelerator chips that support the evolution of the generative AI market. The company is the second-largest producer of AI accelerator chips behind Nvidia and leads the market in custom AI ASIC chips. Its customers include leading hyper scalers like Alphabet and Meta who are turning to Broadcom for custom silicon due to its performance and cost advantages. We believe the company is a direct beneficiary of a multi-year capital cycle driven by hyper scalers building out next-generation AI factories.
Broadcom recently acquired VMware, the leader in virtualization software targeting the enterprise market. The integration of VMware is tracking ahead of plan as management has simplified its product bundles, transitioned to a subscription revenue model, and reduced operating costs. We believe this simplified go-to-market structure will result in strong top-line revenue growth and expanding operating margins. We believe Broadcom will compound intrinsic value per share in the mid-20% range over the intermediate term as it benefits from the AI-infrastructure build-out, a cyclical recovery in its legacy semiconductor business, and modestly accelerating growth from its infrastructure software business as VMware is successfully integrated.”
