10 Best Magic Formula Stocks for 2025

8. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 161

Gotham Asset Management’s Q4 2024 Stake: $49.9 million

Broadcom Inc. (NASDAQ:AVGO), one of the world’s leading technological companies, has a significant presence in both hardware and software. The company’s key competence is in offering networking and custom chips for a wide range of applications.

Broadcom Inc. (NASDAQ:AVGO) reported $14.05 billion in revenue for the fourth quarter of 2024, representing a 51% year-over-year gain. AI sales increased 220% from the previous year to $12.2 billion, while semiconductor revenue reached a new high of $30.1 billion. The company’s cutting-edge AI XPUs and Ethernet networking solutions were considered the primary drivers of this growth.

Citi maintained a Buy rating and $220 price target on Broadcom Inc. (NASDAQ:AVGO) on January 13, despite anticipated regulatory headwinds. The firm expressed worry over recent allegations that there might be more limitations on AI chip shipments to China. Notably, Bytedance, AVGO’s third-largest ASIC client, may be harmed by these limits, possibly affecting $2-$3 billion in fiscal year 2025 sales, or 3%-5% of the company’s estimated sales for the year. Nonetheless, even with uncertainties centered on government policy, Citi remains optimistic about Broadcom’s prospects. While the firm recognizes the difficulty of anticipating government initiatives, it believes that overall growth in the AI sector would more than make up for any potential loss of sales to Bytedance.

Aristotle Atlantic Partners, LLC made the following comment about AVGO in its Q4 2024 investor letter:

Broadcom Inc. (NASDAQ:AVGO) contributed to performance in the fourth quarter as the company’s third quarter results demonstrated continuing strength for its AI networking and custom accelerator semiconductor business. The company also gave long-term guidance for the service addressable market (SAM) opportunity for its AI-related business, indicating a market opportunity of $60 billion to $90 billion, which only includes contributions from its current three customers. This long-term outlook for AI semiconductor content exceeded investor expectations. Broadcom’s quarterly results also showed the company is ahead on its VMware integration timeline to achieve $8.5 billion in EBITDA, which will support long-term gross and operating margin expansion for the company.