We recently published billionaire Ken Fisher’s list of his 10 favorite AI stocks for the rest of 2024. Broadcom Inc. (NASDAQ:AVGO) ranks No. 8 on our list, so it’s worth a closer look.
Billionaire Ken Fisher regularly shares his investing wisdom on his YouTube channel, sharing market insights and lessons he’s learned over the decades. Mr. Fisher recently commented on the Fed’s interest rate cuts, advising investors to focus less on central bank moves and more on long-term investing.
“The fact is, I’ve always said, I won’t live forever. But I want to live a long time, and I keep saying that. Central bankers are crazy. โ Throughout my life, central banks have operated on flawed ideas and groupthink, which is an inefficient way to manage markets. โ
Fisher gave an example of how following crowd psychology when it comes to central bank moves can end up costing you money.
“If we had followed the conventional wisdom that you should get out of stocks when the Fed and other central banks raise interest rates, we would have been fine for a few months in 2022. By mid-summer 2022, we were at the peak of our game.” If a rate hike had happened, you would have been on the wrong side of the market. Starting in June 2022, the Fed raised interest rates by 75 basis points almost every month, giving the market a few more months to rally, leading to the current bull market in 2024.
The basic idea that central bank interest rate hikes would have a negative impact on stock prices was wrong from the beginning. Because it was already factored in. As soon as a central bank interest rate hike became visible, the market was already pricing it in. The bull market started in October 2022 and has continued despite repeated interest rate hikes. โ
In this article, we explore Ken Fisher’s hedge fund holdings for the second quarter and pick out their top AI investments. We analyzed the AI-related growth drivers for each stock. Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Broadcom Inc (NASDAQ:AVGO) Sees AI Growth Despite Mixed Guidance
Photo by Christian Wiediger on Unsplash
Broadcom Corporation (NASDAQ:AVGO)
Billionaire Ken Fisher’s stock: $3,619,968,667
Broadcom Inc (NASDAQ:AVGO) recently released its quarterly results, beating expectations for both EPS and revenue, but the guidance failed to impress the public, leading to a decline in the stock price. But Jefferies said the decline is a buying opportunity.
“While the guidance was a little lighter than expected, management’s message is that AI revenue is stagnant and growth is expected to reaccelerate in the fourth quarter,” Jefferies analyst Blaine Curtis said in a note. โ he said. โCyclical adjustments in non-AI revenue are consistent with peers, and secular trends in AI still favor the industry’s move to custom ASICs, with Broadcom Inc (NASDAQ:AVGO) remaining a favorable Our view is that we are holding our position.” Given the added benefits of the VMware acquisition moving ahead of schedule on both revenue and revenue, it is easy to overcome the minor hurdles. โ
Broadcom Inc (NASDAQ:AVGO) continues to be a leader in the AI โโASCI and networking chip market. The company expects AI revenue to be approximately $12 billion in fiscal year 2024. This means that 20% of the total revenue will come from AI and counting.
Broadcom Inc (NASDAQ:AVGO) has 3nm AI ASIC chip deals with Alphabet and Meta, as well as a number of other tech giants looking to spend big on hyperscaling AI.
The company’s Ethernet business is doing well thanks to its partnership with Arista Networks (ANET), and it has also partnered with Dell (DELL), Juniper (JNPR), and Supermicro (SMCI) in the network business and other areas.
Baron Opportunity Fund says this about Broadcom Inc. (NASDAQ:AVGO) in its Q2 2024 investor letter:
โBroadcom Inc. (NASDAQ:AVGO) is a global technology leader that designs, develops and supplies a wide range of semiconductor and infrastructure software solutions. Driven by two key growth drivers: AI semiconductors and the acquired VMware software business. Shares rose in the quarter after reporting strong earnings.The company again raised its AI-related revenue outlook, both in hyperscale custom computing chips and networking chips, in which Broadcom maintains a dominant market share. In networking, Broadcom’s solutions are expected to grow to more than 100,000 chip clusters in the near term and beyond. In AI Custom Computing, Broadcom designs custom accelerators for consumer Internet AI companies, such as Google and Meta, which is key to allowing it to scale toward a million-chip cluster in a few years. These companies are building increasingly large AI clusters to drive improved user engagement and targeted advertising on consumer media platforms, and VMware is simplifying its product offerings. As we continue to evolve and convert our customers from a license model to a subscription model, we remain on track for continued rapid growth while reducing operating expenses and driving margin expansion and growth faster than expected. We believe these two factors will combine to support VMware’s overall growth profile, far exceeding current analyst expectations and exceeding its near-term quarterly target of $4 billion. A reassessment has been triggered, in the words of CEO Hock Tan: “There’s only one Broadcom. Period.”
Overall, Broadcom Inc (NASDAQ:AVGO) ranks No. 8 on Insider Monkey’s list titled Billionaire Ken Fisher’s 10 Favorite AI Stocks for the Rest of 2024. While we see the potential in Broadcom Inc (NASDAQ:AVGO), we believe in the following: AI stocks hold great promise of achieving higher returns in a shorter time frame. If you’re looking for AI stocks with more promise than AVGO, but trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: Analyst sees new $25 billion ‘opportunity’ in NVIDIA and Jim Cramer recommends these stocks.
Disclosure: None. This article was originally published on Insider Monkey.