10 Best Innovative Stocks to Invest in According to Hedge Funds

6. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 130

Broadcom Inc. (NASDAQ:AVGO) designs and develops a range of semiconductor products and is well known for making is application-specific integrated circuits (ASICs). It also provides infrastructure software products. Some of its products include cable modems, networking processors, and storage adapters. The company serves the data center, networking, software, broadband, storage, and wireless markets.

2024 has been quite a feat for Broadcom Inc. (NASDAQ:AVGO). During the year, the company launched two breakthrough technologies, such as the industry’s first switch platform for scalable AI systems and Retimers, which facilitate the management of large datasets for AI tasks. On October 15, Broadcom Inc. (NASDAQ:AVGO) expanded its 20-year partnership with Deutsche Telekom’s subsidiary, T-Systems, to keep its strategy active. The subsidiary is now a VMware Cloud Service Provider.

During the third quarter, Broadcom Inc. (NASDAQ:AVGO) generated $13.1 billion in revenue, up by 47% year over year. The growth in revenue and operating profits was driven by AI revenue, VMware bookings, and sustained non-AI semiconductor revenue. In the fiscal fourth quarter of 2024, Broadcom expects revenue from AI to grow by 10% sequentially to $3.5 billion, bringing the full-year total to $12 billion, driven by ethernet networking and custom accelerators for AI data centers.

Broadcom Inc.’s (NASDAQ:AVGO) cloud computing platform for enterprises promises a solid growth opportunity as it leverages artificial intelligence. In addition to that, company officials believe AVGO is finally achieving stability on a company-wide level and is on track to becoming an AI powerhouse.

ClearBridge Investments’ ClearBridge Large Cap Value Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter:

“In IT, we bought Broadcom Inc. (NASDAQ:AVGO) as we believe the company has a long runway for growth with its custom silicon business, which should be more durable and less volatile than other components within the AI food chain. We also believe the acquisition of VMware creates another opportunity for steady, subscription-based durable growth that is still in its early innings. We believe the stock has an attractive risk/reward profile given the reasonable visibility toward mid-teens EPS growth at a low-20s P/E multiple. We made room for Broadcom by exiting Lam Research, whose shares we believed priced in a full recovery, while we grew increasingly concerned that China exposure might create an air pocket.”