12 Best Technology Stocks to Invest In for the Long Term

9. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 128

Broadcom Inc. (NASDAQ:AVGO) provides semiconductor solutions and specializes in the design and development of application-specific integrated circuits (ASICs). It serves a range of markets, including data centers, networking, software, broadband, storage, and wireless. It has 3nm AI ASIC chip deals with Alphabet and Meta along with other tech giants aiming for AI hyperscaling.

For FY2024, revenue for the company reached a record $51.6 billion. AI alone generated $12.2 billion in revenue, a 220% surge year-over-year, representing 41% of semiconductor revenue. This was due to the demand for custom AI accelerators (XPUs) and AI networking solutions. In FQ4 2024, AI revenue reached $3.7 billion, representing 150% growth, driven by a doubling of AI XPU shipments to three hyperscale customers and 4x growth in AI connectivity revenue.

The company’s AI semiconductor revenue is expected to outpace non-AI semiconductor revenue in the coming years. Three hyperscalers are developing their own multi-generational AI XPU roadmaps, with each planning to deploy 1 million XPU clusters across a single fabric by 2027. This presents a significant Serviceable Addressable Market for XPUs and networking, estimated to be between $60-$90 billion by 2027. Broadcom Inc. (NASDAQ:AVGO) is on track for volume shipments of its next-generation 3-nanometer XPUs to hyperscale customers in H2 FY2025, solidifying its leadership position.

The company’s strong earnings and strategic positioning in the AI revolution make it a compelling long-term investment according to Columbia Threadneedle Global Technology Growth Strategy. It stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter:

“Similar to the earnings results for Nvidia, shares of Broadcom Inc. (NASDAQ:AVGO) initially sold off after the company reported solid earnings that fell light of elevated market expectations, but the stock did recover from its drawdown in the matter of a few weeks. With an enticing combination of custom chip offerings as well as networking assets, Broadcom remains one of the best positioned companies as part of the AI revolution. Broadcom outlined a path to derive a majority of its revenue from the AI end market within a couple of years, and the non-AI part of the business has stabilized after a deep correction. The company’s dominant market position in its end markets, along with durable growth, strong margins and best-in-class capital allocation, presents an opportunity to compound capital over time.”