We recently compiled a list of the Jim Cramer’s Game Plan This Week: 10 Stocks to Watch. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against the other stocks featured in Jim Cramer’s game plan for this week.
Jim Cramer, the host of Mad Money, recently discussed the current state of the market, touching on various factors including upcoming earnings reports and new inflation data. Reflecting on the November jobs report, which came in largely as expected, Cramer noted:
On Friday, Cramer remarked that the market had a relatively calm session, with the Dow dipping by 123 points, the S&P gaining 0.25%, and the NASDAQ climbing 0.81%. He emphasized that nothing about Friday’s action surprised him, and he maintained his expectation for a 25-basis point rate cut later this month. Cramer added that he still anticipates the Fed will go ahead with this move despite the recent data.
READ ALSO Jim Cramer Discussed 10 Stocks That Can Do Well in December and Jim Cramer’s Lightning Round: 7 Stocks to Watch
Looking ahead, Cramer highlighted Wednesday’s upcoming release of the Consumer Price Index (CPI), which he noted could play a crucial role in the Fed’s decision-making. With the Federal Reserve meeting in just two weeks, he cautioned that there will be chatter about the Fed’s decision to cut rates.
“All of us still see high prices when we go to the supermarket, right? So we shouldn’t be surprised if the CPI comes in hot. At that point, why should the Fed really bother to cut? Be ready for that kind of chatter. Don’t worry, they’ll still cut.”
The following day, Thursday, will bring the release of the Producer Price Index (PPI), which Cramer pointed out is another important inflation measure. He again expressed concern that inflation needs to cool down in order to avoid complications. There has been ongoing speculation about whether the Fed could hesitate on rate cuts, which could derail the market’s expectations. Cramer remarked that if inflation remains elevated, the Fed might have no choice but to delay or even shelve rate cuts for next year.
“Bottom line: Look, I’m trying to get my arms around a market that takes up all sorts of crypto, lots of unprofitable companies, never too great a sign for those who want the Fed to cut repeatedly,” he said. “I want you to keep that in mind so you won’t be surprised if we get some overheated inflation numbers next week and the market gives up some of these extraordinary gains.”
Our Methodology
For this article, we compiled a list of 10 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 6. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
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).
A technician working at a magnified microscope, developing a new integrated circuit.
Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Cramer pointed out that Broadcom Inc. (NASDAQ:AVGO) stock usually rises ahead of the quarter and then experiences a sell-off following the report.
“Finally, one of my favorite stocks reports, Broadcom, symbol AVGO by the way. It reports, and this tends to run up into the quarter and then sell off when we see the actual sales and earnings. I expect that to happen again as Broadcom makes equipment from networking and artificial intelligence as well as hardware, phones, and servers, and hardware’s a little out of fashion all of a sudden. Now, we own Broadcom for ages for the Charitable Trust and I’ve urged investing club members to buy Broadcom on these very dips I just mentioned. It’s been a terrific successful strategy. This time should be no different. So let’s understand, it goes down at the report and that’s your chance to pull the trigger.”
Broadcom (NASDAQ:AVGO) is a leading company in the design, development, and supply of semiconductor devices, with a long-established history in semiconductor design. According to the company’s management, demand for AI remains strong, and the company expects a 10% sequential growth in AI revenue for the fourth quarter of fiscal 2024, bringing the total AI revenue to over $3.5 billion.
This growth will push the company’s AI revenue for the fiscal year to approximately $12 billion, surpassing its previous guidance of over $11 billion. In addition to AI, the company expects semiconductor revenue in Q4 to reach around $8 billion, reflecting a 9% year-on-year increase.
For its infrastructure software segment, Broadcom (NASDAQ:AVGO) is forecasting Q4 revenue of about $6 billion. The company has guided for a consolidated revenue of approximately $14 billion for the quarter, marking a 51% increase compared to the previous year. This strong revenue performance is expected to result in Q4 consolidated adjusted EBITDA reaching about 64% of revenue.
Looking ahead to fiscal year 2024, the company’s outlook remains positive, taking into account the continued contribution from VMware. The company has provided a revenue guidance of approximately $51 billion for fiscal 2024, with an adjusted EBITDA guidance of approximately 61.5% of the projected revenue.
Overall AVGO ranks 1st on our list of the stocks featured in Jim Cramer’s game plan this week. While we acknowledge the potential of AVGO as an investment, our conviction lies in the belief that 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.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
