Top 10 Stocks to Watch After Federal Reserve’s Rate Cut

3. Broadcom Inc (NASDAQ:AVGO)

Number of Hedge Fund Investors: 156

Stacy Rasgon from Bernstein commented about Broadcom’s potential deal with OpenAI a few weeks back during a program on CNBC. Rasgon said AVGO’s revenue ramp reminds him of Nvidia.

“You know it’s been speculated that it’s OpenAI. It’s plausible. Whoever this is is moving very, very quickly seems to sort of fit with their persona,” the analyst said. “Now this is really important. You have to remember Broadcom had three customers that were shipping these AI chips. It was Google and Meta and ByteDance. They had four others that were prospects. So one of those prospects this one is now converted into a customer. And it is a tremendous amount of revenue. They said $10 billion next year, which is a very fast ramp relative to anything we’ve seen before. And they’re I mean, they’re implicitly guiding, you know, effectively their AI revenues next year. Well over $40 billion. It was like $30 billion as of last quarter. And I don’t know that it stops in 26 either. They sounded fairly positive that it would continue into the years beyond. And so, you know, if it starts to remind me a little bit of the revenue ramp we started to see for Nvidia, like, like several years ago when this really started to kick off.”

For the fiscal fourth quarter, AVGO expects $6.2 billion in AI revenue, up 66% from a year earlier. The company said it secured $10 billion in AI infrastructure orders from a new customer. Many analysts believe this customer is OpenAI. Some media reports said the two companies co-designed a chip that will be launched next year.

What’s Broadcom’s moat? It makes ASIC, chips designed for specific applications and tasks. As major companies look for custom chips to break Nvidia monopoly and lower costs, Broadcom is positioned well to thrive. Many top AI spenders are teaming up with Broadcom to develop these chips, which are expected to be high-margin, high-volume products, potentially driving substantial growth in both revenue and profits.

Renaissance Large Cap Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its second quarter 2025 investor letter:

“Broadcom Inc. (NASDAQ:AVGO) was the largest contributor to our portfolio performance in the second quarter after reporting strong operating results and guidance. The stock benefited from continued invest tor enthusiasm for high growth momentum stocks, as well as from companies with exposure to artificial intelligence. Importantly, Broadcom has been growing its hyperscale and connectivity product portfolios, resulting in increasing revenue exposure to faster growing artificial intelligence applications and offsetting a slowdown in its legacy semiconductor business.”