As the S&P 500 index continues to reach new heights, Wall Street analysts are becoming increasingly bullish on two growth tech stocks: Broadcom and Advanced Micro Devices. Despite a brief summer slump, these companies are poised for a significant rebound, driven by strong demand for their innovative products.
Broadcom, a leader in artificial intelligence (AI) semiconductor solutions, has seen its shares inch closer to new highs after a recent dip. Analysts expect the company’s revenue to surge 44% to $51 billion this year, with AI products contributing a substantial $12 billion to the top line. However, it’s Broadcom’s non-AI business that’s expected to drive the next wave of growth. The company’s non-AI networking revenue grew 17% sequentially over the previous quarter, and management is optimistic about growing demand for its non-AI chip business.
With a forward price-to-earnings ratio of 28, Broadcom shares appear reasonably valued, especially considering analysts expect the company to grow earnings at an annualized rate of 19% over the next several years. As the company’s non-AI business recovers, investors can expect Broadcom shares to hit new highs over the next year and beyond.
Meanwhile, Advanced Micro Devices is positioned to outperform even Broadcom. With a similar forward P/E ratio, AMD is expected to deliver even higher earnings growth, driven by strong demand for its MI300 GPUs and its acquisition of Xilinx. The latter provides AMD with a significant opportunity in cloud, edge computing, and intelligent devices, with an addressable market estimated at $135 billion.
Despite this immense growth potential, AMD shares are undervalued, trading at a modest forward P/E of 30 based on 2025 earnings estimates. As the company reports strong earnings results in the coming quarters, its stock should climb back to new highs, making it an attractive buy on the dip. With analysts forecasting 41% annualized earnings growth in the coming years, AMD stock is a compelling opportunity for investors seeking long-term growth.
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