1. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders as of Q4: 161
Millennium Management’s Equity Stake: $1.70 Billion
Broadcom Inc. (NASDAQ:AVGO), a leading global technology company, is famous for its strategic acquisitions, including LSI, Brocade, CA Technologies, Symantec’s enterprise security business, and VMware. With headquarters in Palo Alto, California, Broadcom operates across hardware and software segments. Its hardware division provides network storage solutions for cloud computing, Wi-Fi systems for mobile connectivity, and optical products like LED displays. On the software side, the company develops mainframe computing tools, business automation software, and cybersecurity solutions, solidifying its position as a major player in the tech industry.
Broadcom Inc. (NASDAQ:AVGO) is well-positioned to capitalize on the growing demand for AI-driven technologies, particularly in data center connectivity and network infrastructure. The company’s diversified portfolio has enabled it to benefit from the rapid adoption of high-performance AI models, which require advanced semiconductor solutions. In fiscal 2024, the company’s revenue surged by 44% year-over-year, primarily fueled by the successful integration of VMware and a significant increase in AI-related revenue. AI revenue alone grew 220% to $12.2 billion, accounting for 41% of the company’s total semiconductor revenue. This impressive growth underscores Broadcom’s strategic focus on AI and its ability to leverage emerging market trends.
Looking ahead, Broadcom Inc. (NASDAQ:AVGO) sees AI as a major driver of future growth, with management projecting a serviceable addressable market of $60 billion to $90 billion by fiscal 2027. During the Q4 2024 earnings call, executives highlighted expectations for Broadcom’s AI semiconductor business to outpace the growth of its non-AI semiconductor division. As demand for AI-powered computing accelerates, the company’s investments in AI infrastructure are expected to strengthen its competitive edge and further solidify its leadership in the semiconductor industry.
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, Broadcom Inc. (NASDAQ:AVGO) ranks first on our list of the top 10 stocks to buy according to Millennium Management. While we acknowledge the potential for AVGO as an investment, our conviction lies in the belief that some 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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