Since late 2022, AI-related stocks have been on a tear. The best returns have come from some of the largest companies by market cap. They’re able to move billions of dollars quickly into AI and adapt.
Other companies have had to take a slower route. But that trend is starting to shift as the next stage of the AI boom expands. It’s likely that other companies will benefit more than big-cap names going forward.
One potential play could be Broadcom (AVGO). The semiconductor manufacturer may be working on a deal to work more closely with OpenAI for AI chip designs.
Whether the specific rumors are true or not, Broadcom is still one of the chip plays best poised to profit from the continued rollout of AI. Earnings are up over 170% in the past year. And Revenues continue to rise. Neither trend looks like it’s going away anytime soon.
Action to take: Investors may want to buy a stake here, and use any market pullback to add to that position. Broadcom also pays a 1.3% dividend yield at current prices.
For traders, shares are still well off their highs from June. The December $180 calls, last trading for about $11.20, could deliver mid-double-digit returns from a further rally by year-end.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.