Broadcom’s success in 2024 has propelled the chipmaker to potentially replace Tesla among the top companies in the stock market, known as the “Magnificent Seven.” According to Interactive Brokers chief strategist Steve Sosnick, Broadcom embodies the current trend of artificial intelligence (AI) stocks, making it a standout performer. The company’s stock has surged by nearly 62% this year, following a strong earnings report that exceeded expectations and subsequent announcement of a 10-for-1 stock split.
In contrast, Tesla has faced challenges related to the slow adoption of electric vehicles, as well as competition from traditional automakers who are scaling back their expansion plans in the sector. Consumers have shown a preference for hybrid vehicles over electric ones, impacting Tesla’s sales. Sosnick noted that the stock market is influenced by “FOMO,” or fear of missing out, with Broadcom benefiting from this sentiment while Tesla is not currently part of the momentum.
Tech stocks, including Broadcom, have been key drivers of the market’s gains this year, with both the Nasdaq Composite and S&P 500 reaching record highs. Broadcom is experiencing robust demand due to the ongoing excitement surrounding AI applications in the tech industry, as customers require high-capacity chips to power complex AI systems. CEO Hock Tan highlighted during an earnings call that the company has seen a significant increase in orders from “hyperscale customers” seeking to utilize Broadcom’s AI suites.
Overall, Broadcom’s impressive performance in 2024 and its strong position in the AI sector have positioned the chipmaker as a top contender among investors, potentially surpassing Tesla as a key player in the stock market’s elite group of companies.
Article Source
https://www.cnbc.com/2024/06/17/broadcom-should-replace-tesla-in-the-magnificent-7-says-interactive-brokers-sosnick.html