Broadcom (AVGO)

Leader. Increasingly into AI chips; recent announcement of 3-nanometer chip puts it on par with NVDA. Yield is 1%, with good 25% pace of growth over last 10 years and good scope to continue. Earnings poised to grow 22% over coming 3 years.

Terrific fundamentals: 38% free cash flow margins and 64% operating margins. A key holding for him. They're in the midst of a secular growth opportunity in AI.

The latest move on the chart is parabolic, it's moved too high. Draw a simple trendline, and you can see that it's way off. Also look at the 200-day MA, and if it's 15+% over, you know it's overbought. Highly likely to pull back. 

Though he would need his more sophisticated office software to be super-accurate, he could see it easily falling to $200-210.

Really large footprint in a niche area of AI, which will provide better growth than an NVDA (whose growth is starting to slow). Building up AI infrastructure and cost efficiency. Valuation is great. The CDR hedges against the CAD moving up from its very low level now. Yield is 1.2%.

They report Thursday. Shares tend to run up before the report, then sell off after. He expects the same. Buy on dips, aggressively.

Product offerings in different industries helps them. Out of total $50B sales, $12B is from AI -- great, but they need to pick up the pace a bit. Concerned about semis in general; SMH ETF has not recovered from July peak the way the rest of tech has.

AI infrastructure chips may escape semiconductor cyclicality, but AVGO is not yet a dominant player in this area.

Concerns about how much capital the cloud companies are spending on chips, scaling might be hitting a wall. Should be more clarity on that in next 6-12 months. Don't chase.

It should do well, though he doesn't know if Cisco's light guidance today will hurt it.

Leader in semiconductors. Sells into a number of end markets. Increasingly, making AI chips. Tapped to supply OpenAI, a real nod to its technical prowess. Last year's acquisition of the high-margin VMWare should attract a rerating. Sees earnings growth at a sustainable 20% pace over next 3 years. Yield is 1.19%, a rare semiconductor dividend payer plus that dividend grows.

Likes it, continues to hold. Within 10% of his 12-month price target of $193.25.

Was upgraded today. They're diversified, including VMware, a subscription business, and they benefit from infrastructure spending. It will continue to rise.

Excellent trend line. Would recommend buying. Uptrends are good for the investor. Could be weakness if trend reverses, so would recommend a partial buy. 50/50 on whether the trend reverses. 

Their business has a highly cyclical component. Sure, it has AI exposure, but the PE is higher than NVDA's and lacks the latter's growth and technology.

He thought their Sept. 5 report was terrific, but AI revenues came in a little light so shares plunged 10%. Ridiculous. Then last week, positive announcements came from Nvidia and Oracle, so all semis rallied, including AVGO by 22%. He owns a large position.

Most important thing to know about semiconductor stocks, AI, and technology: it's exciting at the time, but there are going to be cyclical downturns. So there's going to be a pullback in capital expenditures in the space. Hard to tell when that's going to happen.

Pretty strong chart, with stock price well above the 200-day MA. Higher highs and higher lows. Not overly expensive compared to a lot of tech names out there. Trades around 27-28x earnings, 16-17% growth rate. Forward price to sales is up there at 13x. PEG ratio is 2x. 

Need to be very selective in which names you want to own. There are some tech names trading at a PEG of 1x. Starting to see divergence in valuation. We're getting later in the game to be overly exuberant about technology because earnings are now broadening out beyond tech.