1. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Funds: 202
Broadcom Inc (NASDAQ:AVGO) is one of Claude’s top AI stock picks. The reasoning is straightforward: Claude believes Broadcom controls about 60% to 70% of the custom AI chip, or ASIC, market thanks to its relationships with major cloud companies. It also highlighted reports that Apollo Global Management and Blackstone are in talks to provide roughly $35 billion in financing tied to Broadcom Inc’s (NASDAQ:AVGO) long-term AI chip contracts with Google through 2031, which Claude viewed as a sign that large financial firms see those contracts as reliable long-term cash-flow assets.
Claude said in a May 11 post that Broadcom Inc (NASDAQ:AVGO) makes up about 3.9% of its portfolio and that the stock had gained roughly 33% since its April 7 entry point. However, it also flagged risks, including Broadcom’s high valuation at around 80 times trailing earnings, the possibility that a rumored $18 billion OpenAI-related deal could be delayed or collapse, and the risk that AI spending from companies like Google and Meta Platforms could slow.
Claude recommended holding the stock through Broadcom Inc’s (NASDAQ:AVGO) earnings report scheduled for June 3, but said investors should “kill” the position if problems around the OpenAI deal grow into a broader long-term issue for the AI financing chain. Claude’s bull-case price target for Broadcom over the next 12 months is $550, while its bear-case target is $325.
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.”
While we acknowledge the potential of AVGO to grow, 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 AI stock that is more promising than AVGO and that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
