10 Best Stocks For Beginners With Little Money

2. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders In Q2 2024: 130

Broadcom Inc. (NASDAQ:AVGO) is one of the most diversified technology companies in the world. It has direct exposure to the massive consumer electronics market through its modems, radios, and other products that are used in smartphones. Additionally, 44% of Broadcom Inc. (NASDAQ:AVGO)’s Q3 2024 revenue, or $5.7 billion out of $13 billion came from its software business that primarily sells cybersecurity through a SaaS business model to enterprise customers. SaaS is a growth focused and recurring revenue industry with low margins, and it helps Broadcom Inc. (NASDAQ:AVGO) to ensure predictable future revenues and exposure to high growth industries such as artificial intelligence. High growth was the theme for the firm’s software business in Q3, as revenue grew by 200% as it reaped the benefits from its VMware acquisition. Additionally, Broadcom Inc. (NASDAQ:AVGO)s sizeable chip design experience could create more tailwinds if it can win AI computing chip design orders, especially since rumors believe that OpenAI is working with it to develop alternatives to NVIDIA products. Yet, these tailwinds can evaporate just as soon as they materialize, as was evident in September when shares tanked by 10% after its $1 billion AI sales guidance boost did not beat market estimates.

Broadcom Inc. (NASDAQ:AVGO)’s management shared key details for this guidance during the Q3 2024 earnings call:

“Well, our number in third quarter is pretty much in line what we expect AI revenue to be. And our revenue in Q4 was — forecast for Q4 is what’s giving us the basis to a large extent to step up our guidance for AI revenue for the full year to over $12 billion. So if nothing else, that continues to indicate, I hope to us, that next year the trend will continue to be strong. And again, it’s all largely hyperscalers, cloud, and digital natives. And it’s again, a mix of AI accelerators and networking. And it’s also largely based on backlog we have in place for that. Beyond that — and it shows the growth. Beyond that, no, we’re not guiding you beyond the backlog we have. So I kind of answer your question indirectly on, do I have any more customers? We shall see.”