Unlocking the Power of AI Stocks: Broadcom, Poet Technologies, and Qualcomm – Your Gateway to Future Growth!
Discovering lucrative long-term investments requires a deeper understanding beyond mere profit margins; delve into the essence of a company’s products, for it’s the perfect product that will truly amplify returns. Consider Microsoft, which has enriched many through infusing AI into their Azure cloud services and Windows OS, or NVidia, whose GPUs and acceleration libraries are powering new AI workloads. In this insightful blog, I’ll unveil AI-driven stocks poised for substantial growth, yet often overlooked by conventional wisdom.
Broadcom – Our first Choice AI Stock
Let’s dive straight in. First up, we have Broadcom, a powerhouse with an extensive array of AI software and hardware solutions. Then, there’s Poet, a hidden gem revolutionizing AI data center networking. And let’s not forget Qualcomm, crafting high-performance chips for various edge devices. This blog spans the cloud, the Edge, and the networks bridging them. But before we delve into our first stock, it’s crucial to note: our research is for educational purposes only.
Utilizing AI to tackle real-world challenges is our focus, which is why every stock we cover revolves around AI and the chips empowering it. Additionally, we only invest in stocks when they drop below our price targets because while research guides us on what to buy, price targets dictate when. Now, let’s delve into Broadcom, ticker symbol AVGO. Whether you’re familiar with Broadcom or not, chances are you’re already invested in this company, given its significant presence as the sixth largest in NASDAQ and the tenth largest in the S&P 500, just above JP Morgan Chase. Not to mention, you’ve likely utilized some of their products, including the cyber security platform Sanch, acquired in 2019, and VMware, facilitating virtualization for companies of all sizes. But despite these software acquisitions, the bulk of Broadcom’s revenue stems from semiconductors. Broadcom’s semiconductor division is multifaceted, spanning custom compute offload ASICs for hyperscalers to high-performance switches for AI data centers, such as those used by Google’s tensor processing units. In essence, Broadcom’s networking solutions compete with Nvidia’s offerings but target hyperscalers like Google Cloud and Amazon Web Services. Acquired by Avago Technologies in 2015, Broadcom’s prowess extends beyond software acquisitions to developing 5G wireless components for Apple’s iPhones. With such a diverse portfolio, Broadcom stands as a compelling investment opportunity. If you’re intrigued, let me know if you’d like a deep dive into Broadcom’s history and its full stack of software, hardware, and AI networking solutions. And speaking of intriguing investments, let’s pivot to Poet – AI Photonics.
Poet Technologies – Our Second Choice AI Stocks
The next company I want to talk about is Poet Technologies. They’re on the NASDAQ and their symbol is POET. They’re making AI networking even better. Here’s how: When people think about networking, they usually think about using copper wires. Copper has been used to connect servers, routers, switches, and chips for a long time. But with big computing and AI getting more advanced, copper wires can’t keep up with all the data they need to handle.
Let’s break it down: Copper wires in networks can only handle so much data, and they lose some signals over long distances. But fiber optic cables, which use light instead of electricity, can carry way more data and lose less signal over the same distance. That’s why most AI data centers use fiber optics, like Nvidia’s InfiniBand and NVLink. But here’s the catch: with optics, the challenges aren’t in the wires themselves, but in everything else. Normally, when we talk about computer chips from companies like Nvidia or AMD, all the parts are tightly packed together. But with optics, like lasers and detectors, they’re still separate and have to be put together by hand. Until now, that is. Poet invented a special way to put these optical parts onto a chip using machines, just like how electronic chips are made. This means faster manufacturing and lower costs. And since Poet owns the patent for this technology, no one else can copy it. This is a big deal because it lets them use the same fast and efficient manufacturing processes as modern chip companies.
While other companies are still putting together photonics systems by hand, Poet does it differently. They use a special kind of chip called an optical interposer. This chip lets them combine electronic and photonic parts together on one piece. So, instead of having lots of separate parts in an AI data center’s network, Poet can put them all together on this special chip.
Alright, let’s simplify this. Imagine fiber optic transceivers as plugs that connect switches in data centers to send and receive data using light. There are lots of these plugs in each data center. The important part of these plugs is called the optical engine, which changes electronic signals into light and back again. But making these engines by hand is tricky and expensive. Poet does it differently. They use a special chip to build these engines automatically, making them stronger, more reliable, and cheaper. This is a big deal because data centers need lots of these plugs, and having them cheaper and better gives Poet an advantage. And they’re not just for data centers; they can be used in other things like medical devices and VR headsets too. Poet has three main products: Poet Infiniti, Poet Wavelight, and Poet Starlight. Infiniti is a chip that boosts transmission speeds. Wavelight is a fast transceiver, and Starlight powers connections between chips using light. The market for these products is growing fast, and Poet is poised to take advantage of it. But, they’re not profitable yet, so their stock might be affected by interest rates and they might need to raise more money. Still, I see potential in Poet as a long-term investment.
Qualcomm – Our third choice In AI Stocks
Let’s switch gears and talk about Edge Computing, or EDI. This is when our phones and laptops become smart enough to do AI tasks without relying on the internet. So, instead of sending data to faraway servers and waiting for results, AI happens right on our devices. This makes things faster, safer, and doesn’t need internet all the time.
Take the latest Samsung Galaxy S24 Ultra, for instance. It’s got cool AI stuff like Circle to search, where you can circle something on your screen to search or do a reverse image search. Plus, there’s a live translate feature that can automatically figure out the language of both speakers and turn speech into text and back again. And don’t forget the AI camera, which can zoom up to a huge 100 times! All of this is made possible by Qualcomm’s Snapdragon 8 Gen 3 processor. And it’s not just phones—devices like the Meta Quest 3 and even a fancy new AI pin are also powered by Snapdragon chips.
Even though it may not perform well in most aspects, the Ray-Ban Meta smart glasses still rely on Qualcomm Snapdragon AR chips for real-time processing of photos, audio, and videos, making them a compact and efficient choice.
Qualcomm stock has surged by over 40% in the last 6 months, showing its strong performance. Did you know that Broadcom attempted to buy Qualcomm in 2017 for a whopping $130 billion? That deal fell through due to concerns about its impact on US mobile technology. Qualcomm is a big player in Edge Computing, highlighted by its acquisition of Nuvia in 2021. Nuvia’s founders, who played key roles in designing Apple’s custom chips, now lead engineering at Qualcomm. Their Snapdragon X Elite chip, based on Nuvia’s design, is highly efficient, using 50 to 80% less power than rivals like Apple and Intel. As Qualcomm’s next earnings call approaches, keep an eye on their performance. Last year, Qualcomm and Broadcom were the second and third largest chip designers by revenue, trailing only Nvidia, which has been dominating the market lately. With the rise of data centers, networking, and Edge Computing in the age of AI, understanding these stocks’ potential is key to long-term success.