Broadcom Inc. (NASDAQ:AVGO) is one of the 10 AI Stocks Investors are Watching. On June 26, UBS reiterated Nvidia and Broadcom as “Buy,” stating that both stocks are key beneficiaries of artificial intelligence demand.
In a recent note, the firm highlighted three major pillars that will boost AI demand moving forward: model training for providers such as OpenAI, Google, and Meta, consumer-facing products such as ChatGPT and AI overviews, and building and maintenance of enterprise AI products.
“We remain constructive on AI demand trends. We conclude that demand to train new models and consumer inference workload growth on the back of ChatGPT’s popularity and the continued rollout of various products from Meta, Google, and Amazon should sustain GPU demand for years to come. This should, in turn, drive demand for cloud infrastructure, hardware and other technology that gets pulled along with this compute.”
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While the firm believes that the enterprise adoption pillar is most at risk due to slower adoption, a more uncertain investment return, and the specific configuration is necessary to adapt AI to individual needs. These risks are nevertheless manageable. The firm then highlighted stocks such as Nvidia and Broadcom to own in the space.
“In terms of stock calls on the back of this demand analysis, we remain bullish on NVDA and would also highlight AVGO as key Tier 1 beneficiaries of compute and networking demand, and would also highlight MU as a peripheral beneficiary of increased memory requirements. Globally, we would also highlight TSMC.”
Broadcom is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets.
While we acknowledge the potential of AVGO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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