Wells Fargo’s Tech Stocks To Beat The S&P: 14 Top AI & Non-AI Stocks

11. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders In Q3 2024: 128

NTM EPS Estimate: $5.91

Broadcom Inc. (NASDAQ:AVGO) is a semiconductor designer and cybersecurity software provider. Its dual model offers it exposure to broader consumer and enterprise semiconductor demand as well as a source of high-margin recurring revenue via the cybersecurity business. The key AI exposure enjoyed by Broadcom Inc. (NASDAQ:AVGO) is through the chip design business as it has the potential to partner up with firms such as OpenAI to design AI chips that help the industry shift away from NVIDIA’s pricey GPUs that also suffer from supply constraints due to high demand. Conversely, the firm also depends on the consumer electronics industry which in turn is susceptible to cyclical slowdowns. Broadcom Inc. (NASDAQ:AVGO)’s acquisition of VMWare has also enabled the firm to grow its revenue. Consequently, an uptick in industrial and consumer sectors can inject tailwinds into Broadcom Inc. (NASDAQ:AVGO)’s shares and the firm can benefit from a growing push towards custom AI chips.

Columbia Threadneedle Investments mentioned Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter. Here is what the fund said:

“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.”