Artificial intelligence (AI) stocks have been on the rise, especially after the release of OpenAI’s ChatGPT in late 2022. This surge in popularity has prompted industry leaders like Nvidia to undergo stock splits, aiming to increase the availability of shares to regular investors.
While Nvidia is a prominent player in the market for high-end GPUs used in AI applications, there is another compelling option for investors to consider: Broadcom (NASDAQ: AVGO).
Broadcom, a semiconductor company formed by the merger of Broadcom Corporation and Avago Technologies, offers a diversified range of IT hardware. Unlike Nvidia, Broadcom specializes in custom chips designed for specific client needs, providing cost and power advantages over off-the-shelf solutions.
With clients like Alphabet and Bytedance, Broadcom’s custom chips offer strategic advantages, especially in navigating regulatory challenges and supply chain disruptions. Additionally, Broadcom’s business is not solely focused on AI, but also includes semiconductor services for other industries, providing stability and diversification.
One key growth driver for Broadcom is its acquisition of VMware, which significantly boosted the company’s overall revenue. Despite a 470% increase in shares over the past five years, Broadcom’s upcoming 10-for-1 stock split aims to make its stock more accessible to a wider range of investors.
With a forward P/E ratio of 28, Broadcom’s valuation is attractive compared to other AI-related stocks like Nvidia and Advanced Micro Devices. This makes it a relatively safer bet for investors looking to capitalize on the long-term potential of AI technology.
While Broadcom may not be featured on The Motley Fool’s list of top 10 stocks, its solid fundamentals and growth prospects make it a compelling option for investors seeking exposure to the AI industry.
In conclusion, with its diversified business model, strategic partnerships, and attractive valuation, Broadcom’s stock-split could be a better buy for investors looking to capitalize on the evolving AI landscape.
