Fahad Saleem
3 min read
In This Article:
In September 2024, Stephanie Link, CIO at Hightower, explained during a program on CNBC why she was buying Broadcom Inc (NASDAQ:AVGO) and said the stock was underappreciated.
Over the past eight months, Broadcom Inc (NASDAQ:AVGO) is up over 50%.
“Their AI business in their quarter grew threefold year over year. Their VMware business is growing 4 billion on a revenue run rate basis. Those two pieces within Broadcom represent over 50% of total revenues. And then add on at Goldman conference, they're very, very bullish about their business and they're reiterating all kinds of great targets. I mean, their AI business at the beginning of this year, Scott, was $7.5 billion—that was their target for the full year in AI. They're now at 12 billion, and that's just these numbers are crazy, they're great. And so for me, when it fell last Friday 10%, on Monday I added to it. I added again to it yesterday because I don't think it's fully appreciated because I think everybody gives all the credit in the world to Nvidia, which they should. It's a wonderful company, been a great stock, but there are other names to play as well, especially when I don't think it is as appreciated in the marketplace,” Link said at the time.
A technician working at a magnified microscope, developing a new integrated circuit.
Sands Capital Select Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q1 2025 investor letter:
“Broadcom Inc. (NASDAQ:AVGO) is a key enabler of systems scalability and compute growth via ethernet networking and custom accelerators. We believe Broadcom will benefit from advancements in AI models in conjunction with increases in computing power, also known as scaling laws. Broadcom supports advances in computing power by providing high bandwidth, low-latency networking solutions. Its solutions help relieve bottlenecks in scaling computing power as an increasing number of semiconductor chips work in parallel for AI training and inference. We expect Broadcom’s ethernet switches used for networking to be the primary driver of incremental growth as it benefits from both share increases and demand for larger server clusters that will require better networking solutions. Complementing its networking business, Broadcom is the largest provider of custom chip design services by revenue. These services enable businesses to take greater control of their technology stack, reduce reliance on third-party suppliers, and optimize costs and energy efficiency.”
While we acknowledge the potential of AVGO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.
