We recently compiled a list of 20 Trending AI Stocks Latest News and Notes. In this article, we’ll take a look at where Broadcom Inc. (NASDAQ:AVGO) stacks up to other trending AI stocks.
S&P 500 to hit 6,000 by end of year amid AI boom, profit growth
Joining CNBC’s Squawk Box to discuss the latest market trends, Sanctuary Wealth’s Mary Ann Bartels remains bullish on 2024, expecting the S&P 500 to hit 6,000 by the end of the year. As the Fed shifts toward looser monetary policy and corporate profits continue to grow, the chief investment strategist believes the market will continue its rally heading into November and December.
Currently, the S&P is about 3% away from the 6,000 mark. That’s just eight months after he eclipsed 5,000 for the first time. Monday, October 14, proved to be a new record high for the S&P, marking the second anniversary of the bull market. The milestone represents an impressive recovery over the past two years, when stock prices surged despite lingering recession fears and high interest rates.
The S&P 500 hits all-time highs amid optimism on Wall Street as the third-quarter earnings season gets underway. Corporate profits are proving resilient amid high rates and subdued inflation, and investors are flocking to stocks poised to make the most of the generative AI craze. – Market sentiment remains optimistic as traders anticipate strong financial results and continued growth in technology-driven sectors.
Artificial intelligence-related stocks led the S&P 500 and Nasdaq higher. On October 14, the S&P 500 and the Dow Jones Industrial Average both hit all-time highs, closing up 0.8% and 0.5%, respectively. Meanwhile, the Nasdaq gained 1% and approached a record high of its own. Despite these recent gains, high valuations will seemingly pose a challenge to continued growth, with analysts noting that this could be a sign that the bull market is coming to an end.
Learn more about these developments by accessing 10 Unsexy AI Stocks According to Goldman Sachs And 10 Hot AI Stocks According to Goldman Sachs.
Strategists also warn that going forward, continued gains will depend on identifying sectors with strong profit growth. With artificial intelligence poised to significantly influence future market performance, the focus will now shift to the impact of AI on profitability across various industries. According to Scott Chronert, equity strategist at Citi, for AI to continue to drive market gains, “more companies need to deliver on the promise of AI through margins and profitability metrics.”
At the same time, it is also true that ongoing conflicts in the Middle East, the upcoming US presidential elections and natural disasters can pose risks to the market’s upside. Nonetheless, continued AI innovation and a resilient economy continue to support further progress. In light of this, Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, further notes how the third quarter results could serve as a catalyst for market gains as investors focus on technology fundamentals and ‘AI.
“We continue to expect increased volatility for technology stocks in the near term,” the note said. “However, we remain positive on the technology sector as well as the outlook for artificial intelligence (AI). In this context, we believe that volatility should be used to develop long-term exposure to AI.
According to the bank, October has historically been an eventful month for tech stocks, citing the fact that the realized monthly volatility for the Nasdaq 100 over the past 40 years has been 26% in October, while other months have an average by 22%. Regardless, AI’s strong fundamentals and upcoming earnings season will reaffirm positive growth trajectories.
It is further stated that the overall AI semiconductor industry is expected to witness strong growth, reaching $168 billion by the end of the year. Tech and AI companies are also expected to “beat and increase” expectations for the September quarter. Additionally, the ongoing transition to smaller, more powerful AI chips will result in significant performance improvements, fueling further investment in the sector.
Learn more about these developments by accessing 30 Most Important AI Stocks According to BlackRock And Beyond Tech Giants: 35 Non-Tech AI Opportunities.
Our methodology
For this article, we selected AI stocks by combing through news articles, stock analyzes and press releases. These stocks are also popular among hedge funds.
Why are we interested in stocks that hedge funds are piling into? The reason is simple: our research has shown that we can outperform the market by imitating the stocks selected by the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician working on a magnifying microscope, developing a new integrated circuit.
Broadcom Inc. (NASDAQ:AVGO)
Number of hedge fund holders: 130
Broadcom Inc. (NASDAQ: AVGO) is a global technology leader that globally develops, manufactures and supplies a broad range of semiconductor and infrastructure software products. The company had a strong third quarter of 2024. It reported revenue up 47% to $13.1 billion, fueled by strong demand for AI and VMware semiconductor solutions.
On October 14, 2024, Mizuho Securities adjusted its outlook for Broadcom Limited (NASDAQ:AVGO). He raised his price target to $220 from the previous $190 while maintaining an outperform rating. Mizuho analysts revised their price target upwards due to the company’s potential revenue from its collaboration with OpenAI on custom AI chips.
Vijay Rakesh, an analyst at Mizuho Securities, believes that the company’s current stock price does not fully reflect its AI potential. In particular, Broadcom Inc.’s (NASDAQ: AVGO) silicon business, which includes application-specific integrated circuits (ASICs), allows customers to develop specialized solutions tailored to their needs. The analysis reveals that the partnership could potentially unlock over $16 billion in opportunities for Broadcom Inc. (NASDAQ: AVGO). Additionally, the ASIC market is expected to exceed $56 billion in the coming years, making it a massive opportunity.
AVGO global ranks 3rd on our list of trending AI stocks on the latest news and notes. While we recognize AVGO’s potential as an investment, our conviction lies in the belief that certain AI stocks hold more promise in terms of higher returns in a shorter time frame. If you’re looking for an AI stock that’s more promising than AVGO but is trading at less than 5x earnings, check out our report on cheapest AI stock.
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Disclosure: None. This article was originally published on Initiated Monkey.