Broadcom (AVGO)

At centre of AI infrastructure buildout. Pullback to a level of strong technical support. Biggest customers provide deep, sticky relationships and long-term demand. AI-related revenue now growing at ~3% annually. AI demand not tied to any single customer or model. Record backlog. Sees 32% upside from here. A full 10/10 on fundamentals. Yield is 0.75%.

Two very clear price points he wanted to watch -- one was $330, the other $320. His team had a long, drawn-out conversation on this one, and decided to use $320. Semis look to have gone through a bit of a flush, and this name sold off on earnings. It's been on the 1-yard line for the last 3 weeks, rallied off it today. 

His hard line in the sand is now $320.

Shares slid since reporting last week, but he's not worried. They reported a healthy top and bottom line beat and gave strong sales and EBITDA guidance. Shares fell only because the CEO mentioned that their AI systems won't consist 100% of their own components. The market was stupid about this. The stock ran up a lot before earnings, so it got slammed. He trusts the CEO who always delivers excellent numbers. Shares are cheap now.

The options market suggests a 9% move for Oracle, but 6% for Broadcom. Oracle has to address their capex---will they do a $35 billion private debt deal which will add to their existing debt? Can enter at $185. Broadcom has more opportunity, given more customers for their chips and their existing relationship with Alphabet. Their PE is a little high, but they will benefit from a pivot away from Nvidia to other chips. AVGO has a tremendous growth opportunity, currently at only 9% of market share vs. NVDA's dominance if there is a market pivot, which he feels is happening.

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