6. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Funds: 202
Jim Cramer recently said that semiconductor stocks like Broadcom Inc. (NASDAQ:AVGO) remain hot amid rising demand for chips. He told investors that money might be getting out of software stocks like Salesforce and into chip stocks like Broadcom Inc. (NASDAQ:AVGO). AVGO ranks sixth in our list of stocks in Jim Cramer stock portfolio.
Cramer said in October that investors should not worry about competition for Broadcom Inc. (NASDAQ:AVGO) because there is a lot of business for the company.
“The reason why you don’t have to worry is there’s so much business out there for Broadcom,” he said. “Broadcom is everywhere. I think that you can own, my Charitable Trust owns them both (Broadcom and Cisco). That’s not because we think that both of them are going to clash. And therefore there’s only one winner. We’re doing it because both there’s so much business to be had that I think both are buys.”
Emerald Wealth Partners Focused Equity Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its fourth quarter 2025 investor letter:
“We took advantage of a consolidation in Broadcom Inc.’s (NASDAQ:AVGO) stock price to initiate a position. Its semiconductor design unit has a dominant position in custom chips (ASICs). Broadcom caters for cloud hyperscalers and companies building LLMs that seek to design their own chips. The idea is to create chips designed to efficiently process the specific workload they need and cut their reliance on general purpose units (GPUs) that are very flexible but expensive.
GPUs remain indispensable in training new AI models. But as AI use expands, the scale of the infrastructure required to process user prompts will grow exponentially. Running these models using GPU chips that can cost US$60,000 per unit is not economically sustainable. Broadcom has demonstrated its capabilities in the field as it designed Google’s Tensor Processing Units (TPUs). Alphabet has used TPUs to run search queries since 2015 and now to run inference of the Gemini LLM. Given the cost advantage it gives Alphabet, every large GPU customer is incentivized to design its own ASICs. Down the line it may well be a matter of survival. Since such endeavors are a long journey and require considerable resources, it seems likely most will favor the semiconductor design partner with the most proven experience in the field (i.e. Broadcom) to ensure faster results and minimize the risk of failure.
Broadcom’s other businesses are developing well too. Demand for its networking equipment is strong thanks to the dynamic data center build-up. Fragmentation of the IT hardware environment provides a good fundamental backdrop for VMWare, the virtualization software business Broadcom acquired in 2024.”
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.
Click to continue reading and see Jim Cramer Stock Portfolio: Top 5 Stock Picks.
Disclosure: None. Follow Insider Monkey on Google News.
