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4. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Funds Investors: 128

Moor Insights’ Patrick Moorhead said in a latest program on CNBC that unlike Nvidia and AMD, Broadcom Inc. (NASDAQ:AVGO) was able to give a strong guidance that catapulted its stock.

“Let’s talk about Broadcom. What Broadcom did that Nvidia and AMD didn’t do is give a very rosy forecast, one that was beyond what anyone else would expect. CEO Hock Tan talked about two new incremental hyperscaler wins that weren’t included in their forecast. On the contrary, we didn’t see that from AMD, and we didn’t see that from Nvidia. So unless you’re knocking the skin off the ball, I think a beat is a meat, and a meat is a miss.”

Broadcom threw it out of the park with its latest quarterly results. The most important part of the report? The company expects strong AI semiconductor sales growth to continue. It sees AI semiconductor revenue of about $4.4 billion in fiscal Q2, which would be a 42% year-over-year growth.  Broadcom reported $6 billion in free cash flow for the quarter. Its software business gross margin came in at about 90%. But what’s Broadcom’s moat? It makes ASIC, chips designed for specific applications and tasks. As major companies look for custom chips to break Nvidia monopoly and lower costs, Broadcom is positioned well to thrive. Many top AI spenders are teaming up with Broadcom to develop these chips, which are expected to be high-margin, high-volume products, potentially driving substantial growth in both revenue and profits.

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.

Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q4 2024 investor letter:

“Broadcom Inc. (NASDAQ:AVGO) soared after the company reported quarterly results in December that defied expectations and further solidified the company’s already compelling AI narrative. The technology infrastructure powerhouse with leading positions across wireless, data center networking, AI semiconductors and infrastructure software reported strong results, including the usual prodigious cash flow generation, resulting in a double-digit increase to its dividend. More importantly, investors cheered the increased clarity concerning the company’s AI market opportunity, now estimated at $60 to $90 billion by 2027, up from $15 to $20 billion in 2024. This sizable uptick — and increased confidence provided by the management team about the AI opportunity — drove a re-rating in the stock and the company’s market cap eclipsed $1 trillion in value.”