One Growth Stocks You Should Invest In Right Now

Despite pressures and swings, the U.S. stock market has survived 2024. After a solid 2023, the broad-based S&P 500 index has returned 7.5% in 2024.  

Even though investors are worried about a fall due to high interest rates and geopolitical threats, the market is still profitable. Long-term investors can buy tiny holdings in fundamentally good growth companies riding secular tailwinds to develop wealth.  

Broadcom Broadcom, a renowned high-speed networking solutions company, exceeded consensus projections for revenue and profitability in the fiscal 2024 first quarter ending Feb. 4. However, the company's weaker-than-expected fiscal 2024 outlook has disappointed investors, affecting its share price in the past month. There are still various reasons long-term investors should favor the stock.  

First, hyperscaler customers and large enterprises deploying on-premise AI data centers are buying Broadcom's AI-optimized accelerators and networking components like Tomahawk 5 800G switches, Ethernet, DSP platforms, and optical components. Company AI revenue doubled year over year to $2.3 billion in the first quarter. Broadcom now expects AI sales to represent for about 35% of its fiscal 2024 revenue at over $10 billion, up from 25%.  

Second, custom AI accelerators must work with large clients for years and build a software ecosystem, making it harder for newcomers to enter. Broadcom has worked with two significant hyperscalers for years. Therefore, the company is well-positioned to profit on customized AI accelerator market growth.  

Third, Broadcom's infrastructure software revenue is rising due to VMware's acquisition. Infrastructure sales rose 153% to $4.6 billion in the first quarter. VMware's 10.5-week contribution to Broadcom's first-quarter performance (since the acquisition in November 2023) generated $2.1 billion. VMware predicts double-digit consecutive revenue growth in fiscal 2024.  

Broadcom's VMware goal is to upsell VMware Cloud Foundation (VCF) to vSphere customers. Customers' data centers are virtualized using VCF's computing, storage, and networking software stack. VCF is letting enterprises execute high-performance compute and AI workloads without compromising privacy by creating an on-premise self-service cloud platform alternative to the public cloud.   

VMware's cooperation with Nvidia lets users run complex AI models with VCF using Nvidia's AI hardware. Broadcom's 16.5x P/S ratio is high compared to its five-year average of 9.2x. However, with numerous strong tailwinds, Broadcom is positioned for strong growth in the next months.  

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