We recently compiled a list of the 10 Most Promising Tech Stocks According to Hedge Funds. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against the other promising tech stocks.

NASDAQ is Poised for Long-Term Returns

Big tech is expected to outperform in the coming months. On October 2, Ari Wald, Oppenheimer's Head of Technical Analysis, appeared in an interview on Yahoo Finance to discuss his market thesis and explain why investors must consider high-growth companies.

Wald highlights that market breadth is expected to remain high supporting extended highs throughout the end of 2024. In addition to that, he expects the bull cycle to remain intact and believes the trend will continue in 2025. During the late summer, the market saw a change in the high beta versus low volatility ratio stocks. It was seen that high-beta stocks could not keep up with high dividend-paying and lower-volatility names.

Given the rotational nature of the market, Wald expects higher beta names to make a strong comeback and reclaim their leadership position. Wald suggests that investors should consider investing in higher growth companies, as the Nasdaq and Russel 100 are expected to lead again. Trends show that the mag seven is growing and climbing, as the market conditions continue to settle.

Viewing Tech Stocks on Valuations Alone is Wrong, Strategist Says

Technology stocks have more room to run. On October 14, Malcolm Ethridge, Capital Area Planning Group managing partner, appeared in an interview on CNBC where he discussed the technology market outlook and revealed his favorite picks.

Ethridge suggests that judging stocks based on their valuations alone is a big mistake, especially in the current market cycle which is heavily influenced by the AI boom. Looking at the broader perspective, he believes there are a lot of positive opportunities among the magnificent seven and outside of it.

He adds that companies among the mega tech have been pouring billions into generating large language models and the likes of it. He also suggests that most of this technology is yet to be understood and therefore the true value we can derive from these technologies is yet to come. These companies also have a lot of intrinsic value and there is more to be realized soon.

Now that we have studied the technology market outlook, let's take a look at the most promising tech stocks according to hedge funds. You can also read our piece on the most promising AI stocks according to analysts.

Our Methodology

To come up with the most promising technology stocks according to hedge funds, we sifted through multiple ETFs, our own rankings, and similar rankings on the internet. We then ranked the most promising tech stocks based on the hedge fund sentiment as of Q2 2024.

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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A technician working at a magnified microscope, developing a new integrated circuit.

Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 130

Broadcom Inc. (NASDAQ:AVGO) ranks fifth on our list of the most promising technology stocks according to hedge funds. The semiconductor company designs, develops, and supplies semiconductor software infrastructure products. Some of its products include cable modems, networking processors, and storage adapters.

This year, Broadcom Inc. (NASDAQ:AVGO) launched two breakthrough technologies for artificial intelligence infrastructure, the industry's first switch platform for scalable AI systems and Retimers, facilitating the management of large datasets for AI tasks. Previously in August, the company launched Rally Anywhere, an on-premise version of its enterprise agility platform, that will allow businesses to plan, prioritize, manage, and track activities at every level in the organization.

On September 6, Daniel Newman, Futurum Group CEO appeared in an interview on Yahoo Finance where he talked about AVGO's position in the AI race. He shares that the company's AI business is performing well and AVGO owns the technology to solve some complicated networking use cases. Newman shares that AVGO is priced well and has the conditions to rotate back over the next few quarters,

Overall, Broadcom Inc. (NASDAQ:AVGO) is leading the race for AI infrastructure and holds promise for the future. In the fourth quarter of 2024, Broadcom expects revenue from AI to grow by 10% sequentially reaching $3.5 billion, bringing the full-year total to $12 billion.

Overall AVGO ranks 5th on our list of the most promising tech stocks according to hedge funds. While we acknowledge the potential of AVGO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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.

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