We recently published a list of Analysts Are Talking About These 10 AI Stocks. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against other stocks that analysts are talking about.
Gene Munster from Deepwater Asset Management said in a latest program on CNBC that the AI hardware trade is still intact and the analyst believes DeepSeek is a net positive for the industry.
“The consensus DeepSeek has been a positive for AI. I think when it comes to the cost of AI inference, it’s going to go through the floor. Sam Altman said after DeepSeek that they expect the cost of tokens to go down 10 to 12x per year for their second-tier model. I mean, that’s basically through the floor. And I think the third piece to this, if those two happen, we get this hardware build-out, we the cost of compute or the cost of inference declining. I think you’re going to see some just profound impacts. And so I’m still bullish on this market. I think that what we’re seeing right now is a funk, and I think that we still got two great years left of this AI trade.”
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For this article, we picked 10 AI stocks currently making moves on the back of the latest news. With each stock, we have mentioned its hedge fund sentiment. 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Investors: 161
J.P. Morgan analyst Harlan Sur recently said in a note that Broadcom Inc. (NASDAQ:AVGO) is positioned to benefit from ARM’s expansion into chip design. The analyst believes major tech companies are increasingly turning to custom application-specific integrated circuits (ASICs) for AI accelerators to improve power and compute efficiency. Given Broadcom (NASDAQ:AVGO)’s sizable ASIC business, the company is well-positioned to gain from this trend.
“With the stepped-up focus on compute efficiency (thanks to DeepSeek), we can see these AI ASIC programs being accelerated to further augment compute efficiency and drive a more aggressive cost/compute curve,” Sur wrote in a note to clients. He has an Overweight rating on Broadcom (NASDAQ:AVGO) with a $250 price target.
Aristotle Atlantic Core Equity Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q4 2024 investor letter:
Broadcom Inc. (NASDAQ:AVGO) contributed to performance in the fourth quarter as the company’s third quarter results demonstrated continuing strength for its AI networking and custom accelerator semiconductor business. The company also gave long-term guidance for the service addressable market (SAM) opportunity for its AI-related business, indicating a market opportunity of $60 billion to $90 billion, which only includes contributions from its current three customers. This long-term outlook for AI semiconductor content exceeded investor expectations. Broadcom’s quarterly results also showed the company is ahead on its VMware integration timeline to achieve $8.5 billion in EBITDA, which will support long-term gross and operating margin expansion for the company.
Overall, AVGO ranks 5th on our list of stocks that analysts are talking about. While we acknowledge the potential of AVGO as an investment, our conviction lies in the belief that under the radar 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.
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