Is Broadcom Inc. (NASDAQ:AVGO) the Most Promising Stock According to Analysts?

We recently published a list of the 11 Most Promising Stocks According to Analysts. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against other promising stocks.

On April 23, Stephen Parker, JPMorgan Private Bank co-head of global investment strategy, joined ‘Squawk Box’ on CNBC to express that investors should have a normal level of risk in their portfolios right now. Parker explained that while he is fully in support of remaining invested in the market, he does recommend clients to stay focused on sectors that may be more resilient in a downturn to help protect against losses while staying long. His baseline guidance is for clients to maintain a normal level of risk in their portfolios. Those holding too much cash should get invested, and those overexposed to US markets and the dollar should consider adding non-US exposure. He advised that this is a period where investors must be comfortable with discomfort, as policy uncertainty broadens the range of possible outcomes.

Parker acknowledged that while downside risks are top of mind for many investors, there is also upside potential, especially if there are positive policy surprises, such as clarity on tariffs, which could drive markets back to their highs sooner than expected. His outlook for the S&P 500 index is a wide range, with the high end being flat for the year and a possible range of 5,700-6,200. This reflects heightened policy uncertainty and difficulty in pinpointing a single target. Parker pointed out that even if it takes two years for markets to return to all-time highs, an 8% annual return would still be compelling for equities.  Reflecting on the start of the year, he noted that market multiples were considered rich following 2 consecutive years of 20%+ gains. There was optimism around deregulation and changes to corporate taxes, but few expected the S&P 500 to remain flat for 2 years from a level of 6,200. Parker further explained that even without pro-business policy changes, the market may have faced challenges after such strong recent gains. The pullback in high-performing segments of the US market has brought valuations closer to what he considers normal levels, which also sets the stage for potential upside.

Our Methodology

We sifted through the Finviz stock screener to compile a list of the top stocks that had high analysts’ upside potential (at least 35%). The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 161

Average Upside Potential as of April 23: 39.21%

Broadcom Inc. (NASDAQ:AVGO) specializes in various semiconductor devices with a focus on complex digital and mixed-signal complementary metal oxide semiconductor-based devices and analog III-V-based products. Its products are used in many enterprise and data center networking applications, like AI networking and connectivity, home connectivity, and broadband access.

On April 22, Barclays analyst Tom O’Malley lowered the price target on the stock to $215 from $260, while keeping an Overweight rating. The price target adjustment came from Barclays’ updates on semiconductor and semiconductor capital equipment models to reflect tariffs and the trade war ahead of Q1 2025 earnings. However, Broadcom exceeded January quarter estimates and provided strong April quarter projections.

In March, the company announced that it is expanding its optical interconnect solutions to support AI infrastructure. Broadcom Inc. (NASDAQ:AVGO) introduced new innovative technologies, like the advancements in co-packaged optics (CPO), 200G/lane DSP and SerDes, 400G optics, and PCIe Gen6 over optics. These solutions are designed to help grow and scale AI clusters as well as meet the growing demands of AI workloads.

Mar Vista US Quality Select Strategy is highly positive on the company and stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q1 2025 investor letter:

“We maintain a positive outlook on Broadcom Inc. (NASDAQ:AVGO) shares, despite recent stock price pressure stemming from two key concerns: (1) uncertainty around potential tariffs and the impact on global growth, and (2) investor skepticism regarding the return profile of large-scale AI capex investments by hyperscalers. This skepticism has been amplified by the efficiency gains recently demonstrated by DeepSeek, an unknown Chinese software company, which developed a competitive large language model at a much lower cost. These efficiency gains stoked fears that hyperscalers may have overbuilt AI infrastructure.

Broadcom maintains a strong competitive position in the custom AI ASIC market, as well as a disciplined capital allocation, most recently reflected in the VMWare acquisition. That deal is already delivering better than-expected top-line growth and margin expansion. Broadcom is the leading provider of custom AI ASICs and has been steadily diversifying its customer base beyond its initial anchor client, Alphabet. Many hyperscalers are interested in developing custom ASICs, which are tailored to specific computing tasks, given their lower costs and attractive performance attributes relative to general-purpose GPUs from providers like NVIDIA.

While we remain constructive on Broadcom’s long-term prospects, we did trim our position earlier in the quarter at higher levels to reallocate capital toward a more favorable risk-reward opportunity. Nonetheless, Broadcom remains a core holding in our portfolio and offers an attractive margin of safety. We believe the company is well-positioned to grow intrinsic value by +20% over the intermediate term.”

Overall, AVGO ranks 9th on our list of the most promising stocks according to analysts. While we acknowledge the growth potential of AVGO, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

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