Broadcom's Rally Made US Leading Tech Stock Move From MAG7 to BATMMAAN
Go Wire
December 30, 2024
GoGPT Summarizes Articles
With Tesla outperforming in 2024 and Broadcom Inc. rallying at year-end, the league of tech large-cap stocks leading the US market has added one more above the Mag 7 to become BATMMAAN. BATMMAAN has eight stocks, including Broadcom Inc. $AVGO, Apple $AAPL, Tesla $TSLA , Microsoft $MSFT, Meta Platforms Inc. (NASDAQ: META), Amazon $AMZN, Alphabet $GOOG, and Nvidia $NVDA.
The AI chip maker, Broadcom, has a market capitalization of $1.13 trillion, placing it behind Tesla in the market capitalization ranking. Broadcom's shares have surged since its financial results came out in early December. Broadcom's results showed full-year revenue of $51.6 billion for fiscal year 2024, up 44% year-over-year. Two business segments, AI and VMware, were the core growth engines. The day after the results were released, Broadcom rose 24%, posting its largest single-day gain. Like Nvidia in 2023, Broadcom's impressive results have investors buying the stock in droves.
Currently, almost every cloud service provider needs to use Broadcom's ASIC chip services for their chips. According to Broadcom, Google and Meta are the largest customers of ASIC-customized chips. Sources said that Apple worked with Broadcom to develop technology for AI chips. Mass production is expected in 2026.
Hedge funds significantly purchased Broadcom's stock, according to Your Weekend Reading's monthly analysis. As of Dec. 16, Broadcom ranked only eighth among the largest holdings of 338 hedge funds, suggesting the room to buy more Broadcom's shares.
Overall, the data supports BATMMAAN's role as a pillar in the U.S. market.
Data from the Dow Jones showed that BATMMAAN's combined market capitalization grew over $1.9 trillion, equivalent to over 85% of the total market value increase of the S&P 500 over the same period. As of last Friday, only three sectors rising in the S&P 500 index in December are ones BATMMAAN belong to. While the S&P 500 may have accumulated losses in December, the Nasdaq heavily influenced by large tech stocks accumulated gains of about 2.5% through Friday's close, FactSet data show.
George Cipolloni, portfolio manager at Penn Mutual Asset Management said that while stocks generally rose with the election results in November, the market returned to a highly concentrated pattern in December. Cipolloni explained that rising borrowing costs due to rising U.S. Treasury yields made investors only willing to invest in the mega-caps, leading to the subdued market in December. Stocks with mega-capitalizations are seen as the most resilient to rising interest rates due to the strong cash flow.
Despite the uncertainty of returns, investors are willing to push up BATMMAAN's share price based on its huge investment in AI infrastructure.
Burns McKinney, portfolio manager at NFJ Investment Group, expected that in 2025, investors may ask Broadcom for evidence that proves these investments will pay off. If Broadcom fails to do so, investors may exit Broadcom in favor of value stocks and other attractive sectors.
As of Monday's (Dec. 30th) U.S. stock market pre-market hours, Broadcom is down 1.07%.
#2025 Investment Outlook: What's Ahead?#$Broadcom Inc. Common Stock(AVGO)#$Apple Inc.(AAPL)#$Microsoft Corp(MSFT)#$Amazon.Com Inc(AMZN)#$Alphabet Inc. Class C Capital Stock(GOOG)#$Nvidia Corp(NVDA)