8. Broadcom Inc. (NASDAQ:AVGO)
No. of Billionaire Holders: 25
No. of Hedge Fund Holders: 161
Broadcom Inc. (NASDAQ:AVGO) is a leading global technology firm that designs, develops, and supplies different types of semiconductors, enterprise software, and security solutions. Broadcom operates through two segments: semiconductor solutions and infrastructure software. AVGO shares soared over 13% as tech stocks rallied following the U.S. and China announcing tariff cuts by 115 percentage points for 90 days.
On May 8, Stacy Ragson from Bernstein reiterated a Buy rating on AVGO with a price target of $250. The analyst maintains a positive outlook on AVGO after the company achieved revenue and earnings surprise during Q1. The company is making progress in AI, as its AI revenue saw a huge surge in Q1, soaring over 77% year-over-year to $4.1 billion, exceeding the guidance of $3.8 billion. Broadcom is making key R&D investments in AI, including the development of the industry’s first 2-nanometer AI XPU. Moreover, the integration of VMware and transition to subscription-based models have been a major boost, as it helped 47% revenue growth for infrastructure software in Q1. The 90-day tariff slash will improve quarterly outcomes further in Q2, driven by these major developments in AI and infrastructure.
Mar Vista US Quality Select Strategy maintains a positive long-term outlook on the company and stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q1 2025 investor letter:
“We maintain a positive outlook on Broadcom Inc. (NASDAQ:AVGO) shares, despite recent stock price pressure stemming from two key concerns: (1) uncertainty around potential tariffs and the impact on global growth, and (2) investor skepticism regarding the return profile of large-scale AI capex investments by hyperscalers. This skepticism has been amplified by the efficiency gains recently demonstrated by DeepSeek, an unknown Chinese software company, which developed a competitive large language model at a much lower cost. These efficiency gains stoked fears that hyperscalers may have overbuilt AI infrastructure.
Broadcom maintains a strong competitive position in the custom AI ASIC market, as well as a disciplined capital allocation, most recently reflected in the VMWare acquisition. That deal is already delivering better than-expected top-line growth and margin expansion. Broadcom is the leading provider of custom AI ASICs and has been steadily diversifying its customer base beyond its initial anchor client, Alphabet. Many hyperscalers are interested in developing custom ASICs, which are tailored to specific computing tasks, given their lower costs and attractive performance attributes relative to general-purpose GPUs from providers like NVIDIA.
While we remain constructive on Broadcom’s long-term prospects, we did trim our position earlier in the quarter at higher levels to reallocate capital toward a more favorable risk-reward opportunity. Nonetheless, Broadcom remains a core holding in our portfolio and offers an attractive margin of safety. We believe the company is well-positioned to grow intrinsic value by +20% over the intermediate term.”
