Is Broadcom (AVGO) Stock the Best Way to Invest in AI?
The tech investing renaissance is back in full effect, thanks in no small part to the artificial intelligence (AI) boom. Investors are wanting to capitalize on the AI boom, and companies are feverishly seeking out ways to become AI-adjacent. T…
The tech investing renaissance is back in full effect, thanks in no small part to the artificial intelligence (AI) boom. Investors are wanting to capitalize on the AI boom, and companies are feverishly seeking out ways to become AI-adjacent. This has opened the door for sizable growth among companies like C3.ai (NYSE:AI) and, now, Broadcom (NASDAQ:AVGO). With AVGO stock rising significantly since the start of the year, could AVGO be one of the best ways to play this tech niche?
Generative AI is the breakthrough that the public has been waiting for to spring into an AI frenzy. It is the type of automated technology that enables the polarizing AI art industry and chatbots like OpenAI’s ChatGPT. Before, much of the application of machine learning was left to businesses. Now, though, generative AI has found popularity with the public. Anybody can tap into the technology for anything from general research to editing services to content generation.
In late 2022, this shiny new toy sparked a race between companies — countries even — to develop the best AI products. It’s a mania not unlike the surge in blockchain popularity in 2021, when just about everybody was in some way implementing crypto or non-fungible tokens (NFTs) into their businesses.
The popularity of AI will certainly produce some products or services that nobody asked for, serving a purpose of nothing more than capitalizing on the hype. But it’s also sure to breed plenty of impressive and practical applications as well. Investors are doing well to look to software companies for these advancements, and Broadcom is one of the top prospects.
AVGO Stock Gets Hot on Strong Q1 Earnings, AI Pivot
Broadcom’s AVGO stock is one of the most popular plays for investors looking for an AI buy. The software and semiconductor company is making a rock-solid case for itself. After impressing with its fiscal Q1 earnings, the company is also leaning hard into generative AI.
Earlier in the week, the company reported its earnings for its fiscal Q1. Raking in over $8.91 billion in profit and $10.33 of earnings per share (EPS), Broadcom is exceeding estimates laid out by analysts in the preceding weeks.
This earnings hype is entirely the result of solid sales, especially as it pertains to the company’s semiconductor solutions. However, the company is also in the spotlight due to its growing relationship with AI — hype that has also powered up fellow hardware manufacturer Nvidia (NASDAQ:NVDA) through the start of the year. Indeed, Broadcom already has well-established AI tools by way of AIOps. It’s a service to help IT teams better detect and remedy tech issues for clients.
This is helping Broadcom to build rapport with new AI-frenzied investors. The company is leaning into this strategy in other ways, too. At earnings, Broadcom disclosed that it expects AI-related, high-speed cloud switch sales to bring in $800 million. That’s a 300% increase on what the company generates now through these services.
All in all, Broadcom is branding itself as an appealing “pick and shovel” play. Investors who take on AVGO stock could do so with the expectation that it fuels many of the generative AI products only becoming bigger and more popular throughout 2023. On the year to date, it’s proving itself more than worthy, too. Since January, AVGO stock has increased by more than 15%.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.
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