Top 10 AI News You Shouldn’t Miss

4. Broadcom Inc (NASDAQ:AVGO)

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Evercore ISI recently said the market is expected to experience more of what it saw in 2024, with the investment firm expressing a positive outlook for Information Technology in 2025, calling it “Fill IT up again.”

The firm emphasized that “the bull market in the S&P remains strong” and expects “another 22% upside to 7,200 in 2025.” Currently, the benchmark index stands at 5,940 as the new year begins.

Backing its optimistic view is the Information Technology sector, with Evercore ISI predicting tech will once again lead the market higher. Within the sector, both semiconductors and software were highlighted.

On semiconductors, the firm stated, “semis are coiled for a major move higher,” pointing to high-conviction positions including Broadcom Inc (NASDAQ:AVGO).

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.”