We recently published a list of Top 10 AI News You Shouldn’t Miss. In this article, we are going to take a look at where Broadcom Inc (NASDAQ:AVGO) stands against other top AI news you shouldn’t miss.
JPMorgan Asset Management’s Kerry Craig said in a latest program on CNBC that investors are looking beyond the top AI companies amid valuation and spending concerns following the launch of DeepSeek. The analyst said he remains bullish on the “secular theme” of AI and believes there are still opportunities for the market.
“I think playing it now through the market could be a little bit more of less around the hyperscalers and the producers of this technology and then thinking a little bit further along the AI value chain so the users of this technology, the software companies, maybe utilities, and thinking about energy providers and those further opportunities that may be a little bit better valued when it comes to the prospects and the equity market and where you might see better upside. It’s very difficult to keep repeating these very large returns we’ve seen across these names for the last couple of years.”
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For this article, we picked 10 AI stocks currently making moves on the back of the latest news. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Fund Investors: 128
Joe Tigay from Rational Equity Armor said in a latest program on Schwab Network that Broadcom Inc (NASDAQ:AVGO) will benefit from the rising spending in AI chips space. He mentioned the latest Capex guidance from major companies and said firms are spending “hand over fist” to amass chips.
“It’s just a never-ending fight for the ability to process more data, so the whole community needs to be lifted here… Broadcom Inc (NASDAQ:AVGO) a company that is absolutely a big part of that mix. Their networking capability is really important, it’s really crucial to that mix, and it doesn’t really matter which chips go in there. Broadcom Inc (NASDAQ:AVGO) is going to be a winner on this data center buildout.”
Broadcom Inc (NASDAQ:AVGO) continues to be a leader in the AI ASCI and networking chips market. Broadcom Inc (NASDAQ:AVGO) has 3nm AI ASIC chip deals with Alphabet and Meta in addition to many other tech giants aiming massive spending for AI hyperscaling.
However, the stock could face the impact of what Nvidia is facing today: too high expectations.
In the last quarterly report, Broadcom Inc (NASDAQ:AVGO) revenue was largely in line with estimates. The company has narrowly exceeded revenue expectations by less than 5% in most cases. Some analysts suggest Broadcom’s growth rates will moderate to below 20% CAGR starting the first quarter of 2025. In fiscal Q4, it was +50% topline growth. The market won’t be kind to the stock when the revenue growth rate slows. Broadcom has about $58 billion in net debt, which is relatively high.
Aristotle Atlantic Core Equity Strategy stated the following regarding Broadcom Inc. (NASDAQ: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.
Overall, AVGO ranks 6th on our list of top AI news you shouldn’t miss. While we acknowledge the potential of AVGO, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
