1. 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.
While we acknowledge the potential of Broadcom Inc. (NASDAQ: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.
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