We recently published a list of 12 Best FAANG+ Stocks to Invest in Right Now. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against other best FAANG+ stocks to invest in right now.
The group of stocks formerly known as FAANG were synonymous with technological prowess, market dominance, and high growth. These companies provided exponential returns and offered the chance to be part of the technological revolution. Their rise to dominance was fueled by innovation, digital transformation, the increasing use of the internet, and their insatiable hunger for growth. In the process, they reshaped industries, altered consumer behavior, and redefined customer engagement. However, over the past couple of years, the acronym has lost some of its relevance as some names have changed and new companies have encroached on the territories of these mega-caps. As a result, the market has started using the term “Magnificent Seven” to better represent the most valuable tech stocks. In this list, we include the ‘Magnificent Seven’ plus five interesting stocks that focus on the transformational technology growth trends such as artificial intelligence, cloud computing, EV technology, and streaming.
Let’s begin by understanding the sheer magnitude of these stocks. We created an equal-weighted portfolio (equal investment in each stock) of all 12 mega-cap technology stocks in this list and compared their combined performance with the S&P 500 Index over the past 5 years. Astonishingly, the mega-caps portfolio has returned over 385% compared to the S&P 500 Index’s return of around 86%. Additionally, these 12 stocks now have a combined market cap of over $20.0 trillion, with around $14 trillion added in the past 5 years. In comparison, the total market cap of all US-listed stocks is approximately $60.5 trillion (as of December 2024; source: Wilshire 5000 Index), making these mega-caps account for nearly one-third of the total US market value. Although it’s not entirely fair to compare market caps to GDP, if we could, and if these 12 mega-caps formed a country, they would rival China as the second or third largest country by nominal GDP.
Despite recent intense competition, challenging market dynamics, and a difficult regulatory environment, these tech leaders still stand tall with their legacy of innovation and digital transformation. We believe their substantial investments in technology infrastructure, strategic acquisitions, international expansion, and continuous innovation have helped them maintain their dominance. Additionally, the rise of artificial intelligence and machine learning has opened new avenues for growth among these tech giants. With that, let’s explore these 12 stocks.
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Out Methodology
To identify the 10 best FAANG+ stocks, we compiled a list of U.S.-listed technology companies with largest market capitalization, along with the stocks from the FAANG acronym. Ultimately, the stocks were ranked in ascending order based on their market capitalization, with the stock having the highest market capitalization ranked at the top.
Note: All pricing data is as of market close on January 31.
At Insider Monkey we are obsessed with 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).
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Broadcom Inc. (NASDAQ:AVGO)
Number of hedge funds: 128
Broadcom Inc. (NASDAQ:AVGO) is a global technology company that designs, develops, and supplies a wide range of semiconductor and infrastructure software solutions. The company’s products play a crucial role in enterprise and data center networking, broadband access, storage systems, smartphones, and wireless communications. Broadcom’s extensive portfolio includes solutions for data center networking, storage, and security, making it a key player in the data center ecosystem. It also provides infrastructure software solutions such as Private Cloud, Tanzu, and VeloCloud to help enterprises develop, deliver, automate, manage, and secure their applications. Its market cap currently stands at $1.0 trillion, up from $144 billion five years ago.
Broadcom Inc. (NASDAQ:AVGO) boasts one of the industry’s broadest IP portfolios, with around 21,000 patents. The company has been focusing on expanding its data center solutions, particularly in networking and storage. Broadcom is well-positioned to benefit from the growing demand for high-speed connectivity and data processing capabilities driven by the rise of cloud computing and AI applications. Recent advancements in 5G technology and strategic acquisitions, such as VMWare in 2023 and Symantec in 2019, have further strengthened Broadcom’s market position, enabling it to capture a larger share of the data center infrastructure market.
In December 2024, Broadcom Inc. (NASDAQ:AVGO) reported strong earnings, with full-year 2024 revenue growing 44% year-over-year (YoY) to $51.6 billion. The ‘Infrastructure Software’ segment revenue grew to $21.5 billion, driven by the successful integration of VMware, while the ‘Semiconductor’ segment revenue rose 7% YoY to $30.1 billion, fueled by AI revenue, which surged 220% YoY. On the impressive AI revenue growth, the company’s CEO noted:
“We see our opportunity over the next three years in AI as massive. We currently have three hyper-scale customers who have developed their own multi-generational AI XPU road map to be deployed at varying rates over the next three years. In 2027, we believe each of them plans to deploy one million XPU clusters across a single fabric. We expect this to represent an AI revenue serviceable addressable market, or SAM, for XPUs and network in the range of $60 billion to $90 billion in fiscal 2027 alone. We are very well positioned to achieve a leading market share in this opportunity and expect this will drive a strong ramp from our 2024 AI revenue base of $12.2 billion.”
Overall, AVGO ranks 8th on our list of best FAANG+ stocks to invest in right now. While we acknowledge the potential of AVGO to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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.
