Why Analysts are Bullish Despite Rumors of Intel Takeover Talks?

We recently published a list of 20 AI News and Analyst Ratings You Should Not Miss. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against the other AI news and analyst ratings that you should not miss.

The artificial intelligence (AI) market continues to show tremendous growth, with significant advances across sectors. According to a report by McKinsey on the AI industry, the AI revolution is driving innovation across industries, with investment in AI increasing sevenfold in recent years despite economic downturns in other tech sectors. This surge is primarily fueled by the growing demand for AI applications in data analysis, content generation, and predictive modeling. In particular, generative AI has drawn the most attention, revolutionizing industries like marketing, customer service, and product design​. Moreover, high-performing companies are heavily investing in AI to gain a competitive edge. These firms, often referred to as AI high performers, allocate a significant portion of their digital budgets – over 20% – to AI technologies. They prioritize AI not only for cost reductions but also for new revenue streams.

Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.

The market for AI applications is set to expand even further, with several industry reports predicting that by 2030, AI could contribute up to $13 trillion to the global economy. Over a course of the next decade, informed estimates by investment advisors at Goldman Sachs indicate that these AI tools could drive a 7% increase in global GDP, worth nearly $7 trillion, and lift productivity growth by 1.5 percentage points overall. Moreover, the bank expects established businesses around the world to spend nearly $1 trillion on developing AI infrastructure in the coming years

Prominent businesses have taken note of these developments. Latest reports suggest that investment titan BlackRock, in partnership with tech giants is likely to launch a more than $30 billion fund focused on AI. The fund will invest in artificial intelligence infrastructure to build data centers and energy projects. The need for energy is a source of particular interest to the business community as AI models require substantial computational power, leading to higher energy consumption.

The sheer scale of computational power required for AI workloads has also forced tech giants to build supercomputer clusters, stringing together expensive chips, cooling systems, networking tools, and other high-tech gear to crunch data. These AI data centers will likely consume a growing amount of energy as the use cases of AI expand. McKinsey estimates that by 2025, 15% to 20% of all data center workloads will be AI-driven, compared to less than 5% in 2020. Furthermore, according to a report from the International Energy Agency, AI data centers could account for as much as 13% of global electricity demand by 2030 if current growth trends continue. Tech giants are thus investing billions of dollars into expanding their AI infrastructure.

Our Methodology

For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular among hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A technician working at a magnified microscope, developing a new integrated circuit.

Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 130

Broadcom Inc. (NASDAQ:AVGO) supplies semiconductor infrastructure software solutions. Latest reports suggest that the company is not considering a potential takeover bid for rival Intel. News publication Bloomberg, citing people familiar with the matter, reports that Broadcom was assessing an offer for Intel but has put the brakes on the project, for now. Intel is pitching large parts of the business, including foundry, to potential buyers as it seeks to raise cash for a total overhaul. Several chip firms, including Qualcomm, are reportedly interested in buying parts of the Intel business. Such a takeover would invite scrutiny from regulators, evidenced by the fact that authorities shut down a potential merger between Broadcom and Qualcomm in 2018.

William Blair analyst Sebastien Naji recently initiated coverage of Broadcom Inc. (NASDAQ:AVGO) stock with an Outperform rating. In an investor note, the advisory underlined that Broadcom was targeting $12 billion in AI revenue in FY24 and there was room for continued steady growth into FY25 and FY26 driven by increasing custom chip demand, improved software monetization, recovery in non-AI semi chips and accelerating growth of Ethernet AI network fabrics.

Overall AVGO ranks 8th on our list of AI news and analyst ratings that you should not miss. While we acknowledge the potential of AVGO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article is originally published at Insider Monkey.

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