Broadcom (AVGO) shares are soaring after the company reported better-than-expected second-quarter earnings, driven by strong demand for its artificial intelligence products. The rally is spreading across the semiconductor sector. To provide insight into this development, Nancy Tengler, CEO and Chief Investment Officer of Laffer Tengler Investments, joins us for a discussion on market dominance.
Tengler described Broadcom as a “poor man's Nvidia (NVDA)” and noted that he includes the company in his “12 Best Ideas” portfolio. He highlighted the company's strategic positioning, noting that it is in a “sweet spot” in the generative AI sector as it benefits from exposure to both hardware and software components. Tengler emphasized that AI-related stocks are “at the heart” of his investment portfolio, highlighting the importance of the technology.
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Video Transcript
Broadcom.
This is one of the most popular tickets on Yahoo Finance.
The company's stock price has soared on profits and a 10-for-1 stock split. In December, Nancy named Broadcom as a top stock to watch on Yahoo Finance, and the company's stock price has risen 12% on the back of strong AI profits.
I'm interested, so let's go.
Let's leave the Tesla story for a moment.
I'm curious if Broadcom is still at the top of your list and is one of the stocks you would add, even after its big rally.
Yes, Julie.
That's why we call it the “poor man's NVIDIA” and it's one of our 12 best ideas portfolios.
BTW, Hau Tang is the highest paid CEO in the country and as a shareholder I am happy to pay that amount because he has given me almost a 1000% return since we added his name. They are doing great.
They effectively integrated the VMware transaction.
And it's creative, which is what he's always done.
He did it on a computer.
There are companies that sit in the sweet spot of generative AI computing and have strong relationships with NVIDIA in the enterprise space, but almost 50% of them also have exposure to software.
This means that the cyclical aspects of the semiconductor business will be mitigated.
So we continue to like it.
So, they're still growing dividends and buying back shares, but most importantly, they're growing their underlying businesses.
Oh man, the poor guy is on video.
I have to tell you, Nancy, that if you met Hock Tan, you wouldn't use that phrase.
But at least early in the training day, the intriguing ripples were spreading across other AI hardware names.
So Marvel, I mean Super Micro, NVIDIA and the broader comments.
Are you seeing the theme of AI being expressed in other ways right now?
Hey Josh, that's a great question.
It's at the heart of our portfolio.
So we're buying old economy companies that are embracing new technologies.
And I talked about it a lot.
Think of Walmart as a prime example of the use of robotics, generative AI cloud computing, and digitalization.
That's one of our themes, the other is the underlying provider.
And in the hardware space, Lam Research is a favorite and owns NVIDIA.
Sorry, Broadcom.
As I said earlier, we do not own NVIDIA.
And a few weeks ago, when software stocks were selling, we said that the hedge funds and hedge funds were selling because they were focusing on something else.
They will come back and I think they will come back to a lot of the names that we own, such as services.
now.
Well, let's see what Adobe reports to us today, and of course Microsoft and other members of the enterprise, Cloud Amazon.
Well, you know, the hyperscalar part of the business is where we're focused as a big holding at Oracle, Nancy.
See you again soon!
Thank you for your good sportsmanship and for coming today.
I am truly grateful.
Thank you, Julie.
Thank you, Josh.
