Broadcom (AVGO)

Trades at 24x forward PE, up because of the VMware deal which is 30% accretive and gets them 50% software exposure in recurring revenues. Not worried that this has run up so much this year. Likes it a lot and owns a big position.

Is up 17% in the past month. They just closed their VMware purchase. Also, they reported a great quarter with solid guidance for 2024. He recently took a few shares off the table, not many.

Really performed well. Best of both worlds: in AI chip space, and valuation is not excessive. He missed this one. Very good company, very good stock. His choice is QCOM, which will do as well over time.

A way to play the semis, trades cheaply and 62% operating margins.

Better than peers like Cisco, because AVGO should close its deal with VMware next week.

With their cash, they will either buyback a ton of more shares or buy VMware which will enhance their multiple.

Buy either way. If the deal closes, AVGO's PE will rise. If not, the CEO will buy as much stock as possible, meaning the stock is cheap. He needs to see the deal close before he can endorse buying this.

The VMware deal needs China's approval to go through and he doesn't know what will happen if it doesn't. But AVGO is a fine company and cheap stock and run by a superb CEO.

A decent runway ahead. He owns this and especially VMware. China is holding their merger hostage as a bargaining chip against Biden, but he expects the deal to close in December.

Good runway to 12-month price target of $996.75. Essentially, a system on a chip. 75% of revenue from semiconductors, 25% from infrastructure software. Owns in separately managed accounts. Not as expensive as some of the other semis.

They report next week. A reasonably valued way to participate in gen-AI; they will grow that AI revenue from 10% in 2022 to 25% in 2024, $1 billion in AI revenue. There could be a strong jump in shares with strong earnings.

He likes it very much. It's going down with Nvidia; they are joined at the hip.  But at $800, not $850.

Extremely well run. Moving into software via acquisition, laying people off to save costs. He's been trimming on the way up, leaving him with a 2% weighting.

Very good exposure to A.I. (GPU for generative models).
Expecting demand for GPU's to grow.
Also sells network equipment to power GPUs.
Excellent company with lower valuation that competitors like NVIDIA.
Has M&A opportunities in pipeline.

A core position. Well diversified. Mostly semiconductor, but also a slow-growing infrastructure software business. Will benefit from AI. Conservative management, estimating AI-related revenues will grow to 25% next year from 10% in 2022. Makes custom chips, multi-billion partnerships. Network chips tap into growth of AI. Yield is 2.11%.