Broadcom (AVGO)

Is up 27% this year. They will have a great quarter when they report this week, but how will the market react? Will the quarter be great enough? Will they announce new TPU customers?

Google built Gemini 3 not with Nvidia chips, but Broadcom's. AVGO jumped over 11% today. AVGO is taking off on the success of Google's Gemini 3.

Sluggish demand on some segments, but sensational demand of AI chips has carried the day. Still has good long-term potential.

Fantastic chart. Holding on at current levels. He wouldn't worry about it until it breaks through $326 -- would mean probably a bit more weakness down to the $291 level. Whole sector's been good, a lot of indicators are washed out. Chips are topical, but they've run hot the last couple of years.

Expect volatility, but it's one of the best names out there. If you're up a lot, just sell some for good money management.

Portfolio construction and management are paramount for his firm. In his dividend growers mandate. Opportunity in front of them is fantastic with AI and data centres. But it's now at a point where it's subject to idiosyncratic risk if it becomes too big a position size in a portfolio. Be prudent.

Chips are difficult because they're cyclical. Cycles tend to be long, and painful on the downside. An upcycle means great days, but you have to time the entry and exit. See his Top Picks for a name with less of a risk profile.

Chart's gone parabolic, indicators are screaming overbought. The thing about mean reversion, is there's no justice in the market and it doesn't have to happen that way. You either say you'll buy more when it goes down, but it never does. Or you decide to buy on the downswing, and it just keeps diving.

Be cautious, just because of the steep parabolic move on the chart. Look for it to go sideways. If you don't own, don't jump in now. If you do own, clip some profits now but keep your base position.

In the hot part of the market. Momentum of the business is decidedly positive. Not cheap, but the return has been great. His firm doesn't buy at high prices, because when there's a hiccup (which you can't forecast) it can turn into pneumonia. That's the risk.

In his dividend growers mandate. Very compelling organic growth. Over coming 3 years, earnings expected to grow 20% and the dividend along with them. Capital allocation framework and organic growth prospects are better than ADBE. 

Software companies are spending all the $$ in the AI race. Who's getting it? The hardware makers, so chip makers are well positioned. Continues to buy.

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.