Stacy Rasgon Says AI Trade Slowdown Not Expected Until At Least 2027, Continues to Like Broadcom (AVGO)

We recently published Top 10 Trending Stocks Everyone’s Watching in Q4. Broadcom Inc (NASDAQ:AVGO) is one of the trending stocks everyone's watching.

Stacy Rasgon, Bernstein U.S. semiconductor managing director and senior analyst, said in a recent program on CNBC that the AI rally is expected to continue and he doesn’t see a downturn or “air pocket” even in 2027. The analyst said he continues to like high-quality semiconductor stocks, including Broadcom Inc (NASDAQ:AVGO).

“There’s a lot of cross investments and things like that where it’s sort of tying them all together. They’ll all, you know, sink or swim, I guess in one piece at some point. In terms of, you know, what we’d like, my general call this year has mostly been own the high quality AI names and ignore most of the rest. And by and large, like that’s kind of worked. Like we’ve liked Nvidia, we’ve liked Broadcom. You know, I still think that the AI cycle, I think we’re still early. I think it’s still got legs and all of these new deals that we’ve been seeing announced, you know, they actually I think have the effect of extending it even longer. Most of these don’t even start to ship until the end of next year. So, if you’re worried about, you know, air pockets or digestion or anything like that, it’s clearly not this year. It doesn’t seem like it’s next year. And if these big projects don’t even start to ship until the end of next year, it’s probably not 2027 either. I think we’ve got some runway on this still. So, we still like those high quality AI names.”

Polen Focus Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its third quarter 2025 investor letter:

“In early August we initiated positions in both NVIDIA and Broadcom Inc. (NASDAQ:AVGO), after having not owned either company over the past 2½ years following the initial wave of enthusiasm around Gen AI. While we have long admired both companies, their highly cyclical business models have made it extremely difficult to forecast future earnings growth with any degree of conviction. Given our approach of seeking durable and persistent earnings growth that compounds over long holding periods, our concern in holding either was that we would be forced to endure a punishing downcycle within our typical holding period – there is very little room that in a concentrated portfolio of 20-30 companies. In fact, pre ChatGPT, NVIDIA had two punishing down cycles over the preceding five years.

That is specifically what has occurred for NVIDIA and Broadcom. While the sheer magnitude of demand for AI chips, servers and networking equipment was something that we clearly underappreciated, new incremental data points over the past few months lead us to conclude the current boom in AI chips and related hardware will likely continue for the foreseeable future giving us greater conviction over the trajectory of future earnings for both NVIDIA and Broadcom.

Broadcom is the other major player in the AI chip market, the number one provider of custom chips, and currently receives the majority of the remaining 10c of every dollar being spent by enterprises. As Gen AI use cases mature, and as inference workloads become a bigger piece of the compute pie, we expect that custom chips (and Broadcom’s in particular) will account for a larger share of the total market. …” (Click here to read the full text)

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.