We recently published a list of Jim Cramer is Talking About These 10 Stocks. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against other stocks that Jim Cramer is talking about.
Jim Cramer in a latest program on CNBC discussed the reasons behind the recent market declines after the ISM Services Index data. Cramer said many are still expecting more rate cuts from the Federal Reserve soon but they are wrong.
“This survey showed surprising strength, so much strength that it makes you think that the FED might not give us more rate cuts anytime soon. Right now, a ton of investors believe that the FED needs to push through a bunch of rate cuts in order to revive the economy. Lots of those bulls are counting on those cuts. That seems wrong today. They were rocked to the core because not only have they been wrong, but they’re starting to question the FED’s credibility. They know nothing,” Cramer said.
Cramer said he was “mystified” by the Fed’s rate cuts amid strong economic data.
“These traders are wondering why the heck the FED cut short rates by 50 basis points September then give another 25 in November another 25 in December what the heck did they see that made them so aggressive judging by the data. Nothing. The credibility issue, if you claim you’re data dependent, and the data is strong then why the heck are you cutting so aggressively.”
Cramer at the time said the latest nonfarm payrolls report would be one of the most important indicators of the economy and it would set the “dialog” in the coming days. Sure it will. The latest jobs data showed unemployment fell and job additions crushed Wall Street expectations. Many now believe the Fed is set to put brakes on rate cuts.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In
For this article, we picked 10 stocks Cramer recently talked about. With each company, we have mentioned the number of hedge fund investors. 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).
Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Investors: 128
In early November, answering a question about a company, Jim Cramer said:
“The semiconductor stocks are so hated that I have to urge you to buy a regular semiconductor right now because they are being put for sale like you wouldn’t believe. But go buy Broadcom, go buy Broadcom, AVGO, and you will like it more than Ultra. I’ll tell you, really.”
Broadcom Inc. (NASDAQ:AVGO) continues to be a leader in the AI ASCI and networking chips market. Broadcom Inc. (NASDAQ:AVGO) has 3nm AI ASIC chip deals with Alphabet and Meta in addition to many other tech giants aiming massive spending for AI hyperscaling.
However, the stock could face the impact of what Nvidia is facing today: too high expectations.
In the latest quarterly results, Broadcom Inc. (NASDAQ:AVGO) revenue was largely in line with estimates. The company has narrowly exceeded revenue expectations by less than 5% in most cases. Some analysts suggest Broadcom’s growth rates will moderate to below 20% CAGR starting the first quarter of 2025. In fiscal Q4, it was +50% topline growth. The market won’t be kind to the stock when the revenue growth rate slows. Broadcom has about $58 billion in net debt, which is relatively high.
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter:
“Similar to the earnings results for Nvidia, shares of Broadcom Inc. (NASDAQ:AVGO) initially sold off after the company reported solid earnings that fell light of elevated market expectations, but the stock did recover from its drawdown in the matter of a few weeks. With an enticing combination of custom chip offerings as well as networking assets, Broadcom remains one of the best positioned companies as part of the AI revolution. Broadcom outlined a path to derive a majority of its revenue from the AI end market within a couple of years, and the non-AI part of the business has stabilized after a deep correction. The company’s dominant market position in its end markets, along with durable growth, strong margins and best-in-class capital allocation, presents an opportunity to compound capital over time.”
Overall, AVGO ranks 1st on our list of stocks that Jim Cramer is talking about. While we acknowledge the potential of AVGO, our conviction lies in the belief that under the radar 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.
