Invest in the Most Intellectual Growth-Oriented Stock for $1,000 at This Moment
Discovering the market's most thrilling stocks might seem like a breeze, but uncovering its smartest growth stock can be a trickier task. These hidden gems often take a backseat to the buzz and hype, but they're worth the investment in the long run due to their predictability and low monitoring requirement.
In the current scenario, the smarter growth stock to buy with an extra $1000 is arguably technological powerhouse, Broadcom (AVGO -1.17%). Here's why:
More Vital Than You Realize
Many investors are familiar with the company, but few can mention a single product it manufactures. They might notice if Broadcom's products vanished though, as it is a significant player in various technological areas, such as the chips managing hard drive connections, motherboard connections, wireless router components, Ethernet adapters, fiber optic couplers, and the software necessary for these components to function. In all likelihood, you rely on a Broadcom-produced product daily, unaware of its presence.
Broadcom's primary growth driver for the near and not-so-near future is the development of artificial intelligence. Even though it was the initial AI focus, the need for lightning-fast computer processors alone isn't enough to harness AI's full potential. To make AI a reality, the connections between these processors need to be as fast as well. Broadcom's recently introduced Sian2 digital signal processor accelerates AI cluster connections at a breathtaking 200 gigabits per second. This is just a glimpse into how Broadcom is aiding the transition to the next era of AI computing.
The AI Tide is Still Rising
Investors are increasingly recognizing Broadcom's importance in AI development. However, they may still underestimate its role in the future of artificial intelligence. According to Broadcom's management, the AI interconnectivity market alone could be worth between $60 billion and $90 billion in 2027, compared to the current $15 billion to $20 billion market. For context, the company did $51.6 billion of business during the 2021 fiscal year, with $12.2 billion of it derived from AI hardware.
This optimistic outlook holds water. Market research firm SkyQuest forecasts the global AI hardware market growth at an average annualized rate of 15.5% through 2032, while Mordor Intelligence predicts a compound annual growth rate of 26% through 2030.
Broadcom is poised to benefit from this growth quickly. The company expects year-over-year AI hardware revenue growth of 65% for the current quarter, initiating company-wide full-year top-line growth exceeding 20%. Similar growth projections follow for the next couple of years. Earnings growth is set to surpass revenue growth.
The anticipated growth isn't solely hype-driven. Broadcom has added two unnamed hyperscale clients to its custom AI chip lineup, bringing the count to five. This positions the company as a leading name in this somewhat niche sector of AI technology.
An Underestimated Long-Term Prospect
While Broadcom shares might be trading below $245.83, the majority of analysts still regard the stock as a strong buy, with their eyes on the potential two, five, or even ten years down the line. Patience is recommended, as it will likely pay off.
[1] - Enrichment Data[2] - Enrichment Data[3] - Enrichment Data[4] - Enrichment Data
- Investing in Broadcom's stocks could be a smart move, as they are a significant player in various technological areas, including managing hard drive connections, motherboard connections, and wireless router components.
- Broadcom's primary growth driver for the future is the development of artificial intelligence, and their recent introduction of the Sian2 digital signal processor accelerates AI cluster connections at a rate of 200 gigabits per second.
- Many investors may underestimate Broadcom's role in the future of artificial intelligence, as the AI interconnectivity market alone could be worth between $60 billion and $90 billion in 2027.
- Broadcom is expected to benefit significantly from the growth of the AI hardware market, with analysts still viewing the stock as a strong buy, even with the current stock price under $245.83.
