Chip stocks that have seen their share prices rise recently offer investors a healthy mix of price appreciation and income. Broadcom has been in the shadow of semiconductor giant and artificial intelligence darling Nvidia this year, but December turned out to be good for the smaller chip company. Broadcom’s stock price has risen by about 38% this month alone, while Nvidia’s has fallen by more than 6%. AVGO Broadcom shares have gained $1 million in the past month. Driven by solid fiscal fourth-quarter earnings and strong prospects related to artificial intelligence, this month’s gains have also propelled Broadcom into the ranks of trillion-dollar companies. The company reported adjusted earnings of $1.42 per share on revenue of $14.05 billion, while analysts expected earnings of $1.38 per share on revenue of $14.09 billion based on LSEG. Guidance Highlights However, the real key to the report is forward financial guidance, said Charles Gaffney, managing director at Morgan Stanley Investment Management and portfolio manager of the Eaton Vance Dividend Structured Fund (EIUTX). As of Oct. 31, Broadcom was the fund’s second-largest holding. In fact, Broadcom CEO Hock Tan said that the total market for its artificial intelligence chips and artificial intelligence network components may be between US$60 billion and US$90 billion by 2027. It’s huge,” he said during the company’s earnings call, noting that Broadcom is working with three hyperscale customers. Tan said he expects these customers to deploy 1 million AI chips in network clusters by 2027. “This looks like a strong fundamental case that the business will continue to outperform over the next several years,” Gaffney added. “And, historically, Broadcom has been a great dividend story.” Dividend Growth As evidence, the company raised its quarterly dividend by 11% to 59 cents per share for fiscal 2025. This marks the company’s 14th consecutive annual dividend increase since it began paying annual dividends in fiscal 2011. “From a dividend growth perspective, this setup looks very good,” Gaffney added. “It’s hard to find a high-quality company that can grow its dividend at the rate that they have and maintain a strong long-term outlook.” Broadcom’s dividend yield currently stands at 1%, but for technology companies — especially those just starting out this year — Companies that pay dividends – The key is to provide a sustainable dividend and grow it over time. This ultimately rewards long-term investors who buy and hold the stock, especially if they reinvest the dividends. “The artificial intelligence theme is becoming more and more of a long-term growth story in the market,” Gaffney said. “(Broadcom) is one of the big names in technology and it gives you the best of both worlds: tremendous capital appreciation. , and provide dividends and dividend growth.” — CNBC’s Kif Leswing contributed reporting.
