Broadcom (AVGO): The Non-Nvidia Winner in Chip Designers

Middle Coast Investing, an investment advisor firm, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The third quarter was favorable for Middle Coast Investing. Its collective portfolio outperformed the S&P 500 and is ahead of benchmarks year to date. In Q3 2025, the US Portfolios returned 9.6% compared to 7.8% for the S&P 500. It’s Core U.S. portfolios returned 10% while the Russell 2000 returned 12%, the S&P 600 returned 8.7% and the Nasdaq generated 11.2% for the same period. Also, its European Portfolios appreciated by 5.5%. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Middle Coast Investing 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 -2.04%, and its shares gained 93.39% of their value over the last 52 weeks. On October 3, 2025, Broadcom Inc. (NASDAQ:AVGO) stock closed at $338.37 per share, with a market capitalization of $1.598 trillion.

Middle Coast Investing stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its third quarter 2025 investor letter:

"Semiconductor companies are the ‘picks and shovels’ of AI. Taiwan Semiconductor (TSM) is the bedrock manufacturer of semiconductors, while Broadcom Inc. (NASDAQ:AVGO) is increasingly viewed as the non-Nvidia winner in chip designers. Broadcom trades at roughly 85x trailing earnings, 65x trailing free cash flow, and 36x next year’s earnings. I have never owned such a bubbly large cap stock. We trim the position regularly, leery of booking too large a tax hit, and also aware that Broadcom is a great company, both profitable and fast-growing. It is also tremendously valued."

Broadcom Inc. (NASDAQ:AVGO) is in the 12th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 156 hedge fund portfolios held Broadcom Inc. (NASDAQ:AVGO) at the end of the second quarter, compared to 158 in the previous quarter. In the fiscal third quarter of 2025, Broadcom Inc. (NASDAQ:AVGO) reported record revenue of $16 billion, up 22% 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 Nancy Pelosi 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.