Brad Gerstner Portfolio: Top 7 New Stock Picks

3. Broadcom Inc. (NASDAQ:AVGO)

Altimeter Capital’s Stake Value: $68,464,388

Number of Hedge Fund Holders: 128

Broadcom Inc. (NASDAQ:AVGO) ranks third on our list of the 7 new stock picks by Brad Gerstner. He trimmed his position in NVIDIA slightly and added AVGO to his portfolio. It designs and develops a range of semiconductor products and is well known for making 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.

Throughout the year, the company has launched crucial breakthrough technology for AI tasks and AI systems. On November 5, the company announced the launch of VeloRain, an AI and ML platform that enhances AI security workloads. On the same day, Broadcom Inc. (NASDAQ:AVGO) unveiled a private cloud platform, part of its VMware Cloud Foundation, improving AI autonomy and security for its customers.

Attributable to its growing stakes in AI, the company expects revenue from AI to increase 10% from the previous quarter to reach $3.5 billion. This will bring the full-year total to $12 billion. Similarly, in the third quarter of 2024, Broadcom Inc. (NASDAQ:AVGO) saw a 47% increase in consolidated revenue and a 44% increase in net income.

AVGO’s performance and growing importance in the AI sector explain why hedge funds are bullish on the stock. At the end of the third quarter of 2024, 128 hedge funds were bullish on the stock, according to Insider Monkey’s database.

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.”