Analyst Explains Why He's Bullish on Broadcom (AVGO) Amid AI Agent Revolution

Broadcom Inc (NASDAQ:AVGO) is one of the 10 Stocks to Buy and Sell in 2025: Top Analyst Calls.

Ben Reitzes, Melius Research managing director, recently said in a program on CNBC that AI chip companies will benefit in the future amid an increase in the usage of LLMs and inference. He thinks “seat-based” business models are under threat from AI.

“Agents are just going to be able to do this. And what it’s going to do is it’s going to reduce your software seats. So seat-based models are threatened and outcome-based models are rewarded. And what that means is like infrastructure software could do better, but it really just means keep buying Nvidia, guys. They’re going to power the AI models. You know, they’re going to win. Maybe keep buying the clouds who are going to host all and deploy it. But the SaaS guys, it’s going to be tough.”

Asked which companies can benefit the most from this trend, the analyst named Broadcom Inc (NASDAQ:AVGO).

“I mean Broadcom has a great portfolio of infrastructure software and of course they’re leading and doing great.”

  Photo by L N on Unsplash Broadcom’s moat? It makes ASICs, chips designed for specific applications and tasks. As major companies look for custom chips to break Nvidia monopoly and lower costs, Broadcom is positioned well to thrive. Many top AI spenders are teaming up with Broadcom to develop these chips, which are expected to be high-margin, high-volume products, potentially driving substantial growth in both revenue and profits.

Mar Vista U.S. Quality Premier Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its second quarter 2025 investor letter:

“Broadcom Inc. (NASDAQ:AVGO) shares rebounded from their calendar Q1 decline as investor concerns surrounding Trump-era trade tensions and the risk of suboptimal returns on large-scale AI capex by hyperscalers proved to be overstated. The company delivered a solid fiscal Q2 2025 (April quarter) and guided for accelerating AI semiconductor revenue growth through FY2026.

Broadcom remains the leading provider of custom AI ASICs and continues to diversify its customer base beyond its initial anchor client, Alphabet. It now has three hyperscaler customers in volume production and disclosed that four additional customers are currently designing custom ASICs based on Broadcom’s technology. Management is optimistic that these new design wins will transition to volume production in the coming years. Interest in custom ASICs remains high among hyperscalers, as these chips offer compelling cost and performance advantages over general-purpose GPUs from providers like Nvidia, particularly for specialized compute workloads.”

While we acknowledge the potential of AVGO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.