13. Broadcom Inc. (NASDAQ:AVGO)
Share Price Upside: 17%
Number of Hedge Fund Investors In Q2 2024: 130
Average Analyst Share Price Target: $198.48
Broadcom Inc. (NASDAQ:AVGO) is one of the most diversified technology companies in the industry. It plays an essential role in the semiconductor industry by designing and selling modems that are used in smartphones, selling switches and other products used in networking equipment, and modules and other products used in satellite systems, charging products, and other items. As if this weren’t enough, Broadcom Inc. (NASDAQ:AVGO) also plays a key role in the cybersecurity industry as it operates an enterprise cloud security system, and the firm also provides network load balancing, virtualization, and automation through cloud computing. Naturally, this means that not only is Broadcom Inc. (NASDAQ:AVGO) able to profit from gadgets and other computing hardware, but it also allows the firm to earn stable recurring revenue through the cloud and cybersecurity products. As a result, Oppenheimer’s optimism is unsurprising, as it shares that Broadcom Inc. (NASDAQ:AVGO) enjoys ” substantial EPS and [free cash flow] growth driven, in part, by its long record of successful accretive M&A,” and that it also “has one of the most strategically and financially attractive business models in semiconductors.”
Aristotle Atlantic Partners mentioned Broadcom Inc. (NASDAQ:AVGO) in its Q2 2024 investor letter. Here is what the firm said:
“Broadcom is a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. The company strategically focuses its research and development resources to address niche opportunities in target markets and leverage its extensive portfolio of U.S. and other patents and other intellectual property to integrate multiple technologies and create system-on-chip component and software solutions that target growth opportunities. Broadcom designs products and software that deliver high performance and provide mission-critical functionality. The company has a history of innovation in the semiconductor industry and offers thousands of products that are used in end products such as enterprise and data center networking, home connectivity, “set-top boxes broadband access”, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom differentiates itself through its high-performance design and integration capabilities and focuses on developing products for target markets where it believes it can earn attractive margins.
We view Broadcom’s semiconductor business as being very well positioned to benefit from secular growth in data center networking, which is being driven by AI and cloud computing. The company continues to invest in research and development, and we see this as a competitive advantage for the company. Broadcom’s infrastructure software business is a recurring revenue business model that provides mission-critical mainframe support software to its customer base. The recent VMware acquisition will enhance this business strategy and accelerate the growth rate of this business unit, as VMware’s product suite includes key tools for AI server upgrades. Our long-term investment thesis is supported by Broadcom’s success in its strategy of maintaining technology and market share leadership in mission-critical markets with high switching costs and deep profit pools.”
