We recently published a list of the 10 Best Growth Stocks To Invest In Now. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against other best growth stocks.
What Does the Santa Claus Rally Mean for Stocks?
Is a December rally in store for stocks in 2024? Some investors are expecting a surge in stocks from the 24th of December to the 3rd of January, 2025, also referred to as the Santa Claus Rally. On December 17, Ryan Detric, Chief Market Strategist at Carson Group, Joined Catalysts on Yahoo Finance to discuss whether he expects December to be a record-breaking month for the stock market.
Historically, the first half of December is usually slow for the stock market, while the second half is faster, suggested Detric. He also added that compared to election years in the past, this December has been very “flattish” so far. He also suggested that the Fed is going to continue the easing cycle and with the CPI declining, the current market conditions are favorable. Detrick then added that despite macroeconomic conditions and the performance of the Dow Jones index recently, he expects to see a record surge this month and expects “Santa Claus” to make an appearance this year.
“It’s a Bullish Environment for Big Tech”
Since the elections, stocks have been rallying with high hopes for the future. On December 18, Dan Ives, Managing Director at Wedbush Securities, joined Market Domination on Yahoo Finance to discuss his outlook on Big Tech and the new administration. Ives emphasized that the autonomous robotics and disruptive technologies sectors are going to benefit strongly from the new administration and its policies, despite concerns over tariffs. He also discussed the growing relationship between the new administration and Elon Musk, and how the two parties “need each other” to thrive, suggesting that Musk’s company has solid growth potential in the coming year and AI innovation will strengthen the collaboration immensely.
He also added that the environment is extremely bullish for Big Tech and expects growth in the coming year. Ives shared that while there are a few road bumps, especially from the Chinese market, the environment in retrospect is positive. Speaking of the electric vehicle market, he emphasized that new policies in the US coupled with international consolidation, especially in Europe and Asia, will benefit EV makers in the United States immensely.
The expectations from growth stocks are immense as the AI revolution takes precedence.
Our Methodology
To come up with the 10 best growth stocks to invest in now, we went over multiple rankings on the internet to compile an initial list of growth stocks. We then examined the hedge fund sentiment of each stock and picked the most popular ones. Our list is in ascending order of the number of hedge fund holders as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) designs and develops a range of semiconductor products and is well known for making application-specific integrated circuits (ASICs). The company serves the data center, networking, software, broadband, storage, and wireless markets. During the third quarter, Broadcom Inc. (NASDAQ:AVGO) generated $13.1 billion in revenue, up by 47% year over year. The growth in revenue and operating profits was driven by AI revenue, VMware bookings, and sustained non-AI semiconductor revenue. In the fiscal fourth quarter of 2024, Broadcom expects revenue from AI to grow by 10% sequentially to $3.5 billion, bringing the full-year total to $12 billion, driven by ethernet networking and custom accelerators for AI data centers.
AVGO’s CEO expects a solid opportunity from AI over the next few years, and some strategists agree. On December 14, Laffer Tengler Investments CEO and CIO, Nancy Tengler, joined Yahoo Finance to discuss her position on AVGO. She categorized AVGO as a long-term stock and emphasized that it is a “well-operated company” with solid fundamentals. She also added that the AI spending is “not over” and expects AVGO to benefit from that. Overall, Broadcom Inc.’s (NASDAQ:AVGO) cloud computing platform for enterprises promises a solid growth opportunity as it leverages artificial intelligence.
ClearBridge Investments’ ClearBridge Large Cap Value Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter:
“In IT, we bought Broadcom Inc. (NASDAQ:AVGO) as we believe the company has a long runway for growth with its custom silicon business, which should be more durable and less volatile than other components within the AI food chain. We also believe the acquisition of VMware creates another opportunity for steady, subscription-based durable growth that is still in its early innings. We believe the stock has an attractive risk/reward profile given the reasonable visibility toward mid-teens EPS growth at a low-20s P/E multiple. We made room for Broadcom by exiting Lam Research, whose shares we believed priced in a full recovery, while we grew increasingly concerned that China exposure might create an air pocket.”
Overall, AVGO ranks 7th on our list of the best growth stocks to invest in. While we acknowledge the potential of AVGO to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.