This $1 Trillion Name Can Take Nvidia's AI Crown in 2025
A recent surge from a $1 trillion market-cap semiconductor stock could make it next year's "market darling."
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Last week, we focused on the incredible potential of Broadcom AVGO. At the time, I placed a $240 price target on the stock.
Well, we’re going to need a new target, because just a few days later, that $240 target was hit. Broadcom has joined the $1 trillion market cap club — an exclusive group of U.S. stocks that basically consists of the Magnificent 7.
Perhaps it’s time to change that moniker from Magnificent 7 to Exclusive 8. It’s becoming clear that Broadcom may be the top stock to own for 2025.
Broadcom CEO Hock Tan made some extraordinarily bullish comments in the wake of the company’s recent earnings report, when he indicated that AI could present a $60 billion to $90 billion revenue opportunity in 2027. That’s four times the current size of the market.
What investors may be underestimating is the potential for Broadcom to become the "market darling" of 2025 ‚ not just a market leader, but the one stock that must be owned, regardless of whether you are a hedge fund, a mutual fund or an individual investor.
If you were an investor in the late 1990s, you can remember when Cisco Systems CSCO held that crown. Everyone had to have it, and if they already had it, they wanted more.
In recent years, that role has been filled by Nvidia NVDA. Nvidia has played that role well, gaining 171% year to date, and 2,090% over the past five years.
It’s possible that Broadcom’s ascent to stardom could pull the spotlight away from Nvidia. Shares of Nvidia have underperformed the market in recent weeks, in part due to profit taking.
That underperformance was vividly on display on Monday. As the Nasdaq Composite and the Nasdaq 100 both reached all-time highs, Nvidia fell by 1.68%.
Technically, Nvidia is forming a rounded-top pattern (shaded yellow), and has closed beneath its 50-day moving average (blue) in four of the past five sessions. On Monday, Nvidia traded near a two-month low. The stock is testing major support, in the form of a bullish trend line (black dotted line).
Meanwhile, Broadcom is behaving as if buyers are in a panic. The stock touched $250 on Monday, and has gained an incredible 38% in just two trading sessions. Friday’s post-earnings session produced the highest volume for the stock this year (arrow).
Broadcom is a momentum stock in a momentum-friendly market. It operates in the AI sweet spot of tech. Investors are just now waking up to the company's potential. That's why Broadcom is my top pick for 2025.
At the time of publication, Ponsi was long AVGO.
