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This Magnificent Stock Has Made Many Millionaires, and Could Make More

Updated: 26-10-2024, 12.55 PM

When investors run through their mental catalog of the market’s biggest-ever winners, names like Nvidia and Amazon come to mind. And rightfully so. Nvidia’s tech is at the heart of most artificial intelligence (AI) platforms, while Amazon is largely responsible for ushering in the era of e-commerce. Their stocks’ millionaire-making gains are well justified.

There’s another less obvious name with a similarly impressive track record, however, that could continue dishing out oversize gains. That company is Broadcom (NASDAQ: AVGO). Here’s a closer look at why you may want to step into a long-term position in this ticker sooner rather than later.

In simplest terms, Broadcom makes a wide range of communications technologies. It’s technically been doing it since 1961, when it was still a division of Hewlett-Packard. The Broadcom name materialized in 1991, when the stand-alone entity was launched to capitalize on the opportunities being presented by the then-young broadband and networking industries. Another Hewlett-Packard spinoff company, called Avago, eventually acquired Broadcom in 2016, melding its wireless and wired communications tech offerings with Broadcom’s, although it obviously opted to use the Broadcom name.

So what does it actually manufacture now? Adapters that connect hard drives to motherboards, Wi-Fi antennas, router hardware, and fiberoptic connection solutions, just to name a few.

It’s not the hardware that makes Broadcom such a growth powerhouse, however. It’s the reason its technology is so desperately needed.

See, Broadcom’s tech is critical to data centers, and increasingly so thanks to the rapid growth of artificial intelligence.

Take, for instance, the serious slowdown experienced when transferring mountains of digital data from one processor to another within a wall of motherboard networked to another. Broadcom’s recently introduced Sian2 digital signal processors power past this problem by virtue of being able to handle data at an incredible rate of 200 gigabits per second per lane. What does this mean in layman’s terms? It’s a particularly important solution for generative AI platforms, which is emerging as one of the more marketable uses of artificial intelligence.

And that’s just a sampling of how quietly crucial Broadcom is to the still-growing artificial intelligence industry.

Demand for such solutions isn’t apt to wane anytime soon either. In fact, it’s set to accelerate and persist for a while.

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