Broadcom
Broadcom is a significant player in the technology sector, particularly in the field of artificial intelligence (AI). Under the leadership of CEO Hock Tan, Broadcom has pursued a strategy of growth through acquisitions, focusing on niche technologies. A key area of growth has been its chip portfolio, especially with the Tomahawk and Jericho chipsets. These chips are crucial for data transport in AI applications, driving hypergrowth. Additionally, Broadcom's custom ASICs are utilized by tech giants like Alphabet and Meta Platforms for AI accelerators. Recently, a third major customer, suspected to be Bytedance, has joined this list.
These AI-focused segments have seen revenues increase from $4.2 billion to over $11 billion in just one year. Beyond chips, Broadcom's acquisition of VMware has been strategic. This acquisition has enhanced Broadcom's software capabilities, leading to cost reductions and increased revenue. With its balance between software and hardware, Broadcom is well-positioned to explore further acquisitions. Currently, the stock is down about 15% from its peak, making it an attractive buy.
ASML Holding
ASML Holding holds a monopoly on extreme ultraviolet lithography (EUV) technology, an essential process in creating advanced semiconductors. These semiconductors are vital for the functioning of AI systems. Despite not trading at "cheap" levels, the current dip of 23% from recent highs presents a potential buying opportunity.
ASML's financial performance has been strong, surpassing second-quarter expectations. However, the company has indicated that 2024 may be a pause year in growth, with significant expansion anticipated in 2025. The rising demand for AI-enabled PCs and smartphones is expected to drive industry growth, as evidenced by strong revenue reports from partners like Taiwan Semiconductor Manufacturing. This trend positions ASML for increased revenue in the coming years.
Super Micro Computer
Super Micro Computer is at the forefront of the direct liquid cooling (DLC) technology trend, essential for future AI GPUs due to their high electricity demands. While the company recently missed earnings estimates, leading to a stock drop, it remains a strong candidate for investment. The stock is down 56% from its all-time high earlier this year, yet it has still doubled since the beginning of 2024.
The drop in earnings was due to increased shipping costs for liquid cooling components. Management expects to stabilize margins by the year's end, and projects significant revenue growth. They anticipate $26 billion to $30 billion in revenue for the coming year, potentially outperforming conservative guidance. This makes Super Micro a promising buy during the current market dip.
