Broadcom (AVGO-Q)

NVDA is the clear winner, because its chips make AI possible. There is some competition out there, but AVGO isn't one of them. 

He likes it for the AI market. It sells custom AI chips to companies like Google and Meta for specific applications. It is very efficient and manages margins very tightly at 60% of EBITA. Trades at 37X earnings so it is not cheap.                Buy 47  Hold 5  Sell 1

Want to own leading stocks in sectors that are in favour. Breadth in the semi sector is improving. Made a new 5-year high. Trades better than 94% of companies in the S&P over last 52 weeks. Follow with a trailing stop, which lets you stay in a winning position until you see something changing.

(Stock split 15 July 2024)  His colleagues really did some great research on this last year. In his dividend growers portfolio, and it's increased mightily over the last 8-9 years. On vanguard of supplying chips to hyperscalers. Long runway of growth.

Is making new highs, breaking out. Looks good but is likely overbought. Will pull back to its last peak, a support level.

One of the things his team's looking at right now is that it seems some of the regulations surrounding the semiconductor industry will be reduced (specifically China, but other countries as well). That could mean an expanded market for the semi manufacturing equipment companies, such as KLAC. AVGO has also been a strong performer, and he owns some NVDA. Those two names have strong relative price performance, are economically sensitive, cyclical, and have pricing power.

It sold off after last Thursday's report: revenues +2-% YOY, EPS +44% YOY with semis and infrastructure software numbers also impressing. Also, guidance was healthy. However, shares ran up before that report, their non-AI semis business disappointed and guidance says it will be slow to recover. Also, AVGO didn't comment on current or prospective cuctoemrs. Gross margins for Q2 were in-line, but guidance was weak. He still likes the stock: AI semis revenues beat and are expected to grow next quarter from $4.4 to $5.1 billion. Their networking side is also growing.

Big pullback in April. Pushing out to new all-time highs, quite positive. Long-term chart looks fantastic. Great name. Definitely doesn't mind adding at these levels. Looks technically strong, and in the right place as semis have really started to strengthen and lead the market higher again.

It reports Thursday. He expects it to be great, because software is getting great margins.

Clearly isn't going to topple NVDA from the throne on which it finds itself. Every time someone thinks they can do that, NVDA comes out with a new version of the chip that's even better. This name isn't a bad alternative play to NVDA.

Having data centres in different regions is going to be increasingly important. AI is real, but absolutely ahead of itself. Phenomenal CEO. Up 30% YTD makes him choke on valuation. Best of breed tends to get a premium multiple. May get an opportunity to buy on a dip if we see some weak news coming out of the US.

(Stock split on 15 July 2024.)  Up $11 today, with a good runway to its price target of $273.25.