Mix of Bullish Forces Boosted Broadcom (AVGO) in Q2

Baron Funds, an investment management company, released its “Baron Opportunity Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund posted solid returns, rising 23.27% (Institutional Shares), exceeding the Russell 3000 Growth Index’s (the Benchmark) 17.55% gain and the S&P 500 Index’s 10.94% gain. The Fund appreciated 8.52% for the first half, compared to 5.80% and 6.20% returns for the indexes. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second-quarter 2025 investor letter, Baron Opportunity Fund highlighted stocks such as Broadcom Inc. (NASDAQ:AVGO). Broadcom Inc. (NASDAQ:AVGO) designs and develops various semiconductor and infrastructure software solutions. The one-month return of Broadcom Inc. (NASDAQ:AVGO) was 3.96%, and its shares gained 77.89% of their value over the last 52 weeks. On August 19, 2025, Broadcom Inc. (NASDAQ:AVGO) stock closed at $294.91 per share, with a market capitalization of $1.387 trillion.

Baron Opportunity Fund stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its second quarter 2025 investor letter:

"Broadcom Inc. (NASDAQ:AVGO) is a leading semiconductor and enterprise software company, generating approximately 60% of revenue from semiconductors and 40% from software. The company is strategically positioned at the intersection of high-performance AI compute and networking infrastructure, while also demonstrating disciplined execution in software. Broadcom has continued its leadership in networking silicon from the cloud era to the AI era and emerged as the most reliable silicon partner for AI foundational model builders to design custom chips to train and inference their frontier models. Shares rose during the quarter on continued momentum in Broadcom’s AI product lines. In its April quarter, Broadcom reported over $15 billion in total revenue, up 20%; over $4.4 billion in AI revenue, up 40%; and over $6.6 billion in software revenue, up 25%. Broadcom continued to demonstrate excellent profitability, with operating margins over 65% and free cash flow margins at 43%. On the company’s earnings call and during other public appearances, Broadcom CEO Hock Tan confirmed that all programs supporting the company’s projected $60 billion to $90 billion serviceable addressable AI market by 2027 were “on track,” inference demand had emerged as an important AI revenue opportunity, and that the company’s AI revenue growth should accelerate to the 50% to 60% level for fiscal years 2025 and 2026."

Broadcom Inc. (NASDAQ:AVGO) is in 12th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 158 hedge fund portfolios held Broadcom Inc. (NASDAQ:AVGO) at the end of the first quarter, compared to 161 in the fourth quarter.  In the fiscal second quarter of 2025, Broadcom Inc. (NASDAQ:AVGO) reported record revenue of $15 billion, up 20% year-over-year. While we acknowledge the potential of Broadcom Inc. (NASDAQ: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.

In another article, we covered Broadcom Inc. (NASDAQ:AVGO) and shared the list of best big tech stocks to buy. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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