10 Best AI Stock Picks of Motley Fool Asset Management

7. Broadcom Inc. (NASDAQ:AVGO)

Motley Fool Asset Management’s Stake: $72.93 Million

Major companies are lining up for Broadcom’s custom AI chips. The company recently made headlines after signing deals with Meta, Google and Anthropic.

Broadcom is a leader in the custom AI chip market, where demand is rising as companies look to cut reliance on expensive Nvidia chips. According to a Deloitte report, the custom AI chip market is expected to exceed $50 billion in 2026, driven by a shift in workloads from training to inference, which will account for roughly two-thirds of all compute that year. While lighter inference tasks can be handled on PCs and smartphones with onboard accelerators, enterprise and hyperscale workloads still require high-performance, custom-designed chips to efficiently manage post-training and test-time scaling.

What’s Broadcom’s moat? There are only a few companies capable of delivering high‑performance custom chips tailored for large‑scale AI workloads, and that specialization delivers real economic advantages. While Nvidia’s GPUs dominate general‑purpose AI compute, Broadcom designs application‑specific ASICs and XPUs that hyperscalers prefer for massive inference tasks because they can reduce total cost of ownership by roughly 40–60% compared with GPU clusters, especially in steady, predictable production environments. AVGO ranks seventh in our list of the best AI stocks to buy according to Motley Fool Asset Management.

Clearbridge Dividend Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q1 2026 investor letter:

“In IT, we exited Oracle and trimmed Broadcom Inc. (NASDAQ:AVGO). On the semiconductor side, we modestly reduced our position in Broadcom to fund our new investment in Taiwan Semiconductor (TSMC). While Broadcom remains well positioned, and we remain constructive on the stock, the risk-reward outlook has diminished as the shares have tripled over the last two years. Further, whereas TSMC prospers regardless of who wins the semiconductor race (TSMC manufacturers chips for all the major semiconductor companies), one can conceive of scenarios where Broadcom could become less relevant in the future.”