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Yahoo
15-05-2025
- Business
- Yahoo
This Is My Top Artificial Intelligence (AI) Chip Stock to Buy in May (Hint: It's Not Nvidia or AMD)
Recent earnings reports from AI's major players indicate that infrastructure spending remains a top priority. While this bodes well for Nvidia and AMD, another industry darling is positioned to benefit from these tailwinds. Broadcom's AI business is thriving thanks to cloud hyperscalers, suggesting the stock could be an interesting buy. 10 stocks we like better than Broadcom › It's been a hectic year for investors. Less than a month ago, the S&P 500 was down as much as 15% on the year while the tech-heavy Nasdaq Composite fared even worse -- dropping by as much as 21%. Over the last several weeks, however, the capital markets have shown some signs of resiliency and gradually started to rebound. As of this writing, the S&P 500 is now near breakeven on the year while the Nasdaq is down by just 3%. One of the contributing factors to these recent jolts has been quarterly earnings. Throughout April, companies have reported financial results for the first quarter of 2025. And for the most part, investors appear to be pleased with where things stand. In particular, artificial intelligence (AI) companies not only reported strong financials in Q1, but their outlooks remained quite robust. Cloud hyperscalers Amazon, Microsoft, and Alphabet maintained their capital expenditure (capex) guidance for the year, while Meta Platforms actually raised its AI infrastructure outlook. Indeed, these are positive tailwinds for GPU players such as Nvidia and Advanced Micro Devices. While Nvidia is scheduled to report earnings on May 28, I actually have my eyes on another semiconductor stock that could be the better buy this month. Let's explore why Broadcom (NASDAQ: AVGO) looks like a great under-the-radar opportunity right now. Among cloud hyperscalers and Meta, AI infrastructure spend is forecast to be above $300 billion just this year. While much of that spend will be allocated toward GPUs developed by Nvidia and AMD, each of the "Magnificent Seven" players I referenced above are also building their own in-house chips. Custom silicon is a unique solution that Broadcom offers, hence rising AI capex from these players is also a positive sign for the company. In fact, during the earnings call back in March, Broadcom CEO Hock Tan said that the company beat its AI revenue target "due to stronger shipments of networking solutions to hyperscalers." As Amazon, Microsoft, and Alphabet continue to outfit data centers with AI GPUs and networking equipment, it's highly likely that Broadcom is going to touch this infrastructure in some capacity. The chart below illustrates Broadcom's share price movement since the company reported its last earnings on March 6. While you might think these returns are due to a positively received earnings report, I think something else is at play here. You'll notice that the entirety of the gains illustrated above occurred after March. What may have been the catalyst here? Well, on April 7 Broadcom announced a $10 billion share buyback authorization. The repurchase program runs through Dec. 31. This does not mean that Broadcom has to buy all (or any) stock back; but if it chooses to do so, it only has until the end of the year. Given that Broadcom made this announcement alongside a wave of encouraging earnings reports and renewed AI infrastructure investments, I think it's likely that management sees a rebound in store for the stock during the latter half of the year on the back of continued strength in the AI business and demand from hyperscalers. Hence, the timing of the buyback seems strategic in my eyes. Broadcom is scheduled to report earnings on June 5. At that point in time, each of the Magnificent Seven companies and AMD will have reported. The common thread among them is that growth is humming along just fine across their respective AI businesses. I'm optimistic the same will be in store for Broadcom. Should Nvidia's earnings report later this month follow in the footsteps of its peers, I think it's likely that Broadcom shares could get dragged into a macro uptick. Moreover, during the earnings report investors should also get an idea whether or not part of the stock's recent surge could be attributed to the buyback. For these reasons, I think now is a great time to buy Broadcom stock -- before the company reports earnings in early June. Before you buy stock in Broadcom, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Broadcom wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $613,951!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $796,353!* Now, it's worth noting Stock Advisor's total average return is 948% — a market-crushing outperformance compared to 170% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. This Is My Top Artificial Intelligence (AI) Chip Stock to Buy in May (Hint: It's Not Nvidia or AMD) was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-05-2025
- Business
- Yahoo
Nvidia CEO Jensen Huang gets first salary boost in 10 years
Nvidia (NVDA) CEO Jensen Huang got his first major salary bump since 2015. A regulatory filing from Nvidia Thursday showed the AI chipmaker increased Huang's base salary by roughly 50% to $1.49 million in the 2025 fiscal year ended Jan. 26. (To be sure, the actual amount Huang received for the year was much higher— $344 million — due to Nvidia's soaring stock price.) 'The CC [Compensation Committee of the Board of Directors] raised Mr. Huang's total target pay by $7 million to align more closely with the median of peer company CEOs,' the company said in its SEC filing Thursday. The company wrote that Huang's new salary 'aligned with the 75th percentile of peers.' 'The CC believed this was appropriate in consideration of internal pay equity with the base salaries of other NEOs [named executive officers, or top-paid executives whose compensation must be publicly disclosed] and as it represented Mr. Huang's first base salary increase in 10 years.' Huang's new salary more closely matches up with those of fellow chipmaker executives Hock Tan, CEO of Broadcom (AVGO), and Lisa Su, CEO of Advanced Micro Devices (AMD). The last time the CEO's salary jumped in the double digits was in 2015, when it rose 19% to over $998,000. Salary can be just a small part of compensation for high-level tech executives, though. While Huang had a lower base pay than Microsoft's (MSFT) Satya Nadella and Apple's (AAPL) Tim Cook in fiscal year 2024, the latest year of data available for all three executives, he out-earned them in terms of the full package. Huang's actual compensation was $234 million that year. Nadella and Cook received $171 million and $169 million, respectively. While Huang had earned more than those CEOs, his compensation was far below that of rival Broadcom's CEO Hock Tan, who made over $1 billion in 2024. Nvidia, Apple, and Microsoft have taken turns as the world's most valuable company. Nvidia's market cap has taken a hit in 2024 due to the leading chip stock's 15% decline this year. Its still-massive $2.78 trillion value is behind Apple's roughly $3.1 trillion and Microsoft's $3.25 trillion. Nvidia stock is still up more than 1,500% over the past five years. Laura Bratton is a reporter for Yahoo Finance. Follow her on X @LauraBratton5. Sign in to access your portfolio
Yahoo
16-04-2025
- Business
- Yahoo
A Look Back at Processors and Graphics Chips Stocks' Q4 Earnings: Broadcom (NASDAQ:AVGO) Vs The Rest Of The Pack
Looking back on processors and graphics chips stocks' Q4 earnings, we examine this quarter's best and worst performers, including Broadcom (NASDAQ:AVGO) and its peers. The biggest demand drivers for processors (CPUs) and graphics chips at the moment are secular trends related to 5G and Internet of Things, autonomous driving, and high performance computing in the data center space, specifically around AI and machine learning. Like all semiconductor companies, digital chip makers exhibit a degree of cyclicality, driven by supply and demand imbalances and exposure to PC and Smartphone product cycles. The 8 processors and graphics chips stocks we track reported a strong Q4. As a group, revenues beat analysts' consensus estimates by 2.4% while next quarter's revenue guidance was in line. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 18% since the latest earnings results. Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ:AVGO) is a semiconductor conglomerate spanning wireless communications, networking, and data storage as well as infrastructure software focused on mainframes and cybersecurity. Broadcom reported revenues of $14.92 billion, up 24.7% year on year. This print exceeded analysts' expectations by 2.1%. Overall, it was a strong quarter for the company with a solid beat of analysts' EPS estimates and an impressive beat of analysts' adjusted operating income estimates. "Broadcom's record first quarter revenue and adjusted EBITDA were driven by both AI semiconductor solutions and infrastructure software. Q1 AI revenue grew 77% year-over-year to $4.1 billion and infrastructure software revenue grew 47% year-over-year to $6.7 billion," said Hock Tan, President and CEO of The stock is down 3.3% since reporting and currently trades at $173.50. Read why we think that Broadcom is one of the best processors and graphics chips stocks, our full report is free. Having been at the forefront of developing the standards for cellular connectivity for over four decades, Qualcomm (NASDAQ:QCOM) is a leading innovator and a fabless manufacturer of wireless technology chips used in smartphones, autos and internet of things appliances. Qualcomm reported revenues of $11.67 billion, up 17.5% year on year, outperforming analysts' expectations by 6.7%. The business had an exceptional quarter with a significant improvement in its inventory levels and an impressive beat of analysts' EPS estimates. Qualcomm pulled off the biggest analyst estimates beat among its peers. The stock is down 22.7% since reporting. It currently trades at $135.99. Is now the time to buy Qualcomm? Access our full analysis of the earnings results here, it's free. A global leader in its category, Lattice Semiconductor (NASDAQ:LSCC) is a semiconductor designer specializing in customer-programmable chips that enhance CPU performance for intensive tasks such as machine learning. Lattice Semiconductor reported revenues of $117.4 million, down 31.2% year on year, in line with analysts' expectations. It was a slower quarter as it posted a significant miss of analysts' adjusted operating income and EPS estimates. Lattice Semiconductor delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 21.6% since the results and currently trades at $42.65. Read our full analysis of Lattice Semiconductor's results here. Founded in 1993 by Jensen Huang and two former Sun Microsystems engineers, Nvidia (NASDAQ:NVDA) is a leading fabless designer of chips used in gaming, PCs, data centers, automotive, and a variety of end markets. Nvidia reported revenues of $39.33 billion, up 77.9% year on year. This print surpassed analysts' expectations by 2.5%. More broadly, it was a mixed quarter as it also recorded an impressive beat of analysts' EPS estimates but an increase in its inventory levels. Nvidia delivered the fastest revenue growth among its peers. The stock is down 19.3% since reporting and currently trades at $106.12. Read our full, actionable report on Nvidia here, it's free. Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ:AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers. AMD reported revenues of $7.66 billion, up 24.2% year on year. This number beat analysts' expectations by 1.5%. Zooming out, it was a decent quarter as it also produced a meaningful improvement in its inventory levels. The stock is down 25.1% since reporting and currently trades at $89.61. Read our full, actionable report on AMD here, it's free. Thanks to the Fed's rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn't send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump's November win lit a fire under major indices and sent them to all-time highs. However, there's still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy. Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate. Join Paid Stock Investor Research Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.
Globe and Mail
11-04-2025
- Business
- Globe and Mail
Is Broadcom Stock a Buy or Sell as the Trade War Escalates?
Broadcom (AVGO) is a semiconductor company that focuses on designing, developing, and supplying semiconductor and infrastructure software solutions. The company works in two main segments, Semiconductor Solutions and Infrastructure Software. The global market is experiencing a turbulent period, with market crashes following a series of tariff announcements by the U.S. and Chinese governments, leading to trillions being erased almost overnight. In such conditions, one stock has shown resilience despite the initial knockdown. Broadcom's stock dipped 15% between April 3 and April 4, but the stock has managed to rebound. Over the past five days, Broadcom's stock has surged more than 20%, although it remains 30% below its 52-week high. Escalating Trade War President Donald Trump declared a pause on reciprocal tariffs for most countries while increasing China's effective tariff rate to 145%. In response Asian country has responded by hiking tariffs from 84% to 125% on U.S. goods. The ongoing trade war between the U.S. and China will see significant implications not only for the market in general, but also for Broadcom in particular. At present, the company generates around 20% of its revenue from the Asian country, and the recent tariff hikes will make business difficult. Recent events have led to increased costs for raw materials and logistics, while companies also face supply chain disruptions. This will lead to uneven market demand, which can also affect Broadcom's profitability margins. How Has Broadcom Reacted? In response to the recent news and market crash, Broadcom has announced a $10 billion stock buyback program in a bid to restore investor confidence. The program will last until the end of the year and the number of shares repurchased will be decided after taking into consideration several factors such as market conditions and acquisition opportunities. 'In particular, we are uniquely positioned in mission-critical infrastructure software and enabling hyperscalers to drive innovation in generative AI into their expanding subscriber platforms,' said Broadcom CEO Hock Tan. The market has accepted the move with open arms as Broadcom's shares spiked 20% in a week. Broadcom Surpasses Estimates Broadcom announced its first-quarter results on March 6, when the semiconductor company posted net income of $5.5 billion, translated to $1.60 per adjusted share. The results surpassed Wall Street experts' $1.50 per share estimates. Broadcom had total revenue of $14.92 billion for the quarter, a solid 24.7% rise as compared to the same quarter last year while analysts estimated $14.62 billion in revenue. During the quarter, Broadcom had EBITDA of $10.08 billion, against analysts' $9.66 billion with an EBITDA margin of 67.6%. The operating margin for the quarter came to 42%, a 17.4% rise from the same quarter last year. The solid results were mainly driven by a rise in AI semiconductor solutions and infrastructure software. Broadcom's AI solutions witnessed a growth of 77% year-over-year to $4.1 billion while its infrastructure software had 47% growth year-over-year to $6.7 billion. For the ongoing second quarter, Broadcom's board anticipates revenue of $14.9 billion, a 19% rise YOY. EBITDA is expected to be 66% of the projected revenue, or $9.83 billion, a 32% rise from Q1 2024. Analyst Ratings on AVGO Analysts have expressed their optimism surrounding Broadcom with a consensus 'Strong Buy' rating and a mean price target of $245.68, reflecting upside potential of 36%. The stock has been reviewed by 32 analysts in total and has received 29 'Strong Buy' rating and 3 'Hold' rating.
Globe and Mail
02-04-2025
- Business
- Globe and Mail
Should You Buy the Dip in Broadcom Stock in April 2025?
Tariff fears have ignited a market rout, sending shockwaves through every major index. The tech-driven Nasdaq 100 Index ($IUXX) has borne the brunt, plunging more than 7% in 2025, while semiconductor stocks are caught in a deep correction as recent AI investments have not met investor expectations. Amid this turbulence, chip giant Broadcom (AVGO) is trading far below its recent highs, sparking heated debates among market watchers about whether this dip is a golden opportunity to buy. Let's break down the company's performance to see if Broadcom's recent decline indeed offers a compelling entry point for investors. About Broadcom Stock Based in San Jose, California, Broadcom (AVGO) specializes in designing and manufacturing high-quality semiconductor chips for devices such as computers, smartphones, and other electronics. Broadcom boasts a strong client base, including Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOG), supplying specialized chips for data centers and AI applications, enabling efficient cloud computing and high-volume processing. The company is roughly valued at $800 billion. Broadcom has ramped up investments in advanced chip technologies and custom ASIC solutions designed for data-intensive workloads. This includes next-generation products built on a 3-nanometer process, which is expected to attract major hyperscale cloud providers. Analysts project that Broadcom's serviceable addressable market for AI solutions could expand dramatically, potentially reaching between $60 billion and $90 billion by 2027. After enjoying a stellar year in 2024, the chip leader faced a significant correction in 2025, down 26% year-to-date amid growing fears over massive spending in AI and a broader market downturn. However, the stock is still up 28% over the past year. Broadcom Beats Q1 Earnings and Revenue In the first quarter of its fiscal 2025, Broadcom delivered impressive financial results by reporting consolidated revenues of approximately $14.9 billion, a robust 25% year-over-year increase that beat consensus estimates by 2.23%. This strong top-line performance was driven by both its semiconductor and infrastructure software divisions. The infrastructure software segment saw significant benefits from the VMware acquisition. Notably, 70% of Broadcom's top 10,000 customers have adopted VMware Cloud Foundation, driving a 47% YOY sales increase to approximately $6.7 billion. The company's AI-related revenue surged by an astounding 77% YOY, reaching $4.1 billion, underlining its accelerating presence in the AI market. CEO Hock Tan highlighted this momentum, stating, 'We expect continued strength in AI semiconductor revenue of $4.4 billion in Q2, as hyperscale partners continue to invest in AI XPUs and connectivity solutions for AI data centers.' Additionally, Broadcom's consolidated adjusted EBITDA hit a record $10.1 billion, reflecting a 41% increase from last year, while the adjusted EBITDA margin expanded to 68%, surpassing the guidance of 66%. Non-GAAP EPS reached $1.60, surpassing analyst expectations of $1.51 and marking a 45% year-over-year growth. The firm also reported a robust free cash flow of $6 billion and ended the quarter with approximately $9.3 billion in cash and cash equivalents, reinforcing its strong balance sheet and ability to invest in future growth initiatives. Looking ahead, Broadcom has provided optimistic guidance for the second quarter of the fiscal year 2025, projecting consolidated revenues of approximately $14.9 billion. Similarly, Analysts estimate full-year revenues to be around $60 billion, with EPS projected at approximately $2.10, indicating confidence in Broadcom's sustained growth trajectory. What do Analysts Think about Broadcom Stock Wall Street analysts are highly optimistic about Broadcom's growth prospects. The group of 33 analysts who have been tracking Broadcom stock has assigned a consensus " Strong Buy ' rating, with 30 'Strong Buys' and three 'Holds.' The analysts' average 12-month price target of $251.17 suggests upside potential of nearly 50%. The Bottom Line Despite its recent slump, AVGO still trades at a significant premium based on its sales metrics. Its trailing price-sales ratio stands at 15.3x, approximately 418% above the sector median of 2.8x, while its forward P/S ratio of 12.7x remains nearly 386% higher. These elevated multiples not only surpass broader market averages, but also exceed AVGO's five-year historical valuations by over 40%, raising concerns about potential overvaluation. That said, Broadcom continues to benefit from strong macroeconomic tailwinds within the semiconductor industry. With the global semiconductor market reaching approximately $627 billion in 2024 and projected to approach $700 billion by 2025, driven largely by AI and cloud computing demand, the company remains well-positioned for long-term growth. While valuation concerns persist, Broadcom's exposure to these high-growth segments could justify its premium in the years ahead.
