Investing in fundamentally strong growth companies with sustainable competitive advantages can significantly enhance your investment portfolio. As artificial intelligence (AI) continues to reshape the investment landscape, it’s no surprise that billionaire investors are diving into high-potential AI-driven stocks. Two such stocks worthy of attention are Broadcom (NASDAQ: AVGO) and Apple (NASDAQ: AAPL).
Broadcom, a leading semiconductor chip designer, has seen its shares surge by 25% in 2024. This impressive performance can be attributed to various factors, including a recent 10-for-1 stock split that boosted investor enthusiasm and growing recognition among major investors in the second quarter. Notable firms such as Citadel Advisors, Renaissance Technologies, and Fisher Asset Management are among those that have recognized Broadcom’s potential. The company’s stronghold in the data center networking chips market—boasting a staggering 80% share—positions it well to capitalize on the increasing demand for AI technologies.
In the latest quarterly report, Broadcom’s networking segment experienced a remarkable 43% year-over-year revenue growth, driven by robust orders from hyperscaling companies seeking advanced AI networking solutions and custom AI accelerators. Notably, sales of its Ethernet switching products skyrocketed, while custom AI accelerators surged by 3.5 times year-over-year, showcasing the segment’s profitability and scalability. This push into AI has prompted Broadcom to uplift its projected AI revenue for fiscal 2024 from $11 billion to an optimistic $12 billion.
Moreover, Broadcom’s acquisition of VMware has fortified its enterprise software capabilities, creating a more diversified revenue stream. With VMware contributing significantly to its sales, Broadcom expects impressive margins and further growth as it transitions from hardware dependency to a more software-oriented model. Even after a slight dip in share prices following mixed third-quarter results, Broadcom’s solid fundamentals make it an attractive investment in September 2024.
On the other hand, Apple remains a formidable player in the AI revolution. Though Warren Buffett’s Berkshire Hathaway trimmed its stake in Apple, the tech giant continues to attract investments from several billionaire investors, including Citadel Advisors and Millennium Management. Apple’s fiscal third-quarter results surpassed market expectations, showcasing its resilience in a challenging macroeconomic environment.
The iPhone, historically Apple’s main growth driver, recorded impressive sales, and the company’s latest innovation, Apple Intelligence—which integrates generative AI across its product line—is poised to enhance customer engagement and loyalty. With iOS 18 on the horizon, Apple is gearing up to entice users to upgrade to newer models, further positioning itself for future growth.
Apple’s digital services segment has also hit new revenue heights, seeing a remarkable 14% year-over-year increase, thanks to an ever-expanding customer base and rising subscription numbers. With over 1 billion paid subscriptions, this segment is essential for generating recurring revenue, providing Apple with stability even amidst market fluctuations.
Despite its current trailing-12-month price-to-sales ratio of 8.64, higher than its five-year average, many analysts argue that Apple’s strong fundamentals still present an attractive investment opportunity in AI-driven technology.
As an investor, following the lead of billionaires like Buffett and others could yield promising returns. With robust growth prospects ahead for both Broadcom and Apple, considering a small position in these stocks might be a wise move for those looking to capitalize on the AI trend. Whether you’re a seasoned investor or just starting, now could be an opportune time to engage with these powerhouses in the AI market.
In conclusion, as the demand for AI technologies continues to surge, keeping an eye on stocks like Broadcom and Apple could pave the way for significant investment success. Their proven track records, solid fundamentals, and innovative approaches to AI integrations make them standout choices for investors looking to enhance their portfolios with growth-oriented opportunities in the technology sector.