Goldman Sachs’ List Of Stocks Popular With Mutual Fund Managers: Top 20 Stocks

9. Broadcom Inc. (NASDAQ:AVGO)

Number of  Mutual Funds: 21

Number of Hedge Fund Investors in Q2 2024: 130

Broadcom Inc. (NASDAQ:AVGO) is a diversified technology company with a presence in the hardware and software industries. In the former, the firm designs and sells modems, network adapters, ASICs, and others. These have a broad set of use cases from smartphones to data centers. Broadcom Inc. (NASDAQ:AVGO) also has a presence in the software industry through its cybersecurity division that provides the firm access to stable recurring revenue with high margins. As a result, large order wins, such as those for Apple’s iPhone or AI chips from OpenAI, carry the potential to create tailwinds for Broadcom Inc. (NASDAQ:AVGO)’s shares. The firm has also grown its presence in the software industry through its VMWare acquisition which enabled it to grow software revenue by 300% during its fiscal Q3. However, on the flip side, Broadcom Inc. (NASDAQ:AVGO) also faces risks from customers moving to in house products, such as Apple making custom modems for its smartphones.

Baron Funds mentioned Broadcom Inc. (NASDAQ:AVGO) in its Q2 2024 investor letter. Here is what the firm said:

“Broadcom Inc. is a global technology leader that designs, develops, and supplies a broad range of semiconductor and infrastructure soware solutions. The stock rose during the quarter as it reported strong earnings on the back of its two key growth drivers, AI semiconductors and its acquired VMware soware business. The company once again increased its outlook for AI-related revenue, now expecting $11 billion or more this year (versus prior guidance for $10 billion), on the back of strength in both hyperscale custom compute and networking chips, where Broadcom maintains dominating share. In networking, Broadcom’s solutions are critical to enabling AI training factories to scale towards 100,000 chip clusters in the near term and 1 million chip clusters over the coming years. In AI custom compute, Broadcom designs custom accelerators for large consumer- internet AI companies (such as Google and Meta), who are building increasingly large AI clusters to drive improvements in user engagement and targeted advertising on their consumer media platforms. VMware remains on track to continue rapid sequential growth while simultaneously reducing operating expenses, driving faster-than-expected margin expansion and accretion, as management has simplified the product oering and is converting customers from a license model to subscriptions. We believe VMware will grow beyond the $4 billion near-term quarterly target, well above current analyst expectations. These two factors combined have caused a re-rating to the growth profile for the overall company. To quote CEO Hock Tan, “there is only one Broadcom. Period.”