Stocks to buy

Wall Street rarely sees two trends like artificial intelligence (AI) and stock-split euphoria competing for attention. AI drove record highs for major indices in 2024, while stock splits, though cosmetic, also fueled market excitement for certain names.

Stock splits come in forward or reverse types, with forward splits being more popular among investors. Forward splits lower share prices to attract investors, while reverse splits raise prices to meet exchange standards. In 2024, high-profile companies, such as the following, drew significant attention with their splits.

Let’s dive into some of these splits, what they mean for investors, and whether future splits could be in order for these top tech names.

Broadcom (AVGO)

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Investors continue to anticipate gains from Broadcom’s (NASDAQ:AVGO) recent 10-for-1 split. A Bank of America (NYSE:BAC) analysis shows stocks typically rise 25.4% within a year of a split, versus 11.9% for the S&P 500. On that mathematical basis alone, there’s a thesis behind buying this stock right now.

Citi (NYSE:C) analysts recently noted Broadcom’s rising momentum, citing growing investor interest due to its expanding AI clientele and VMware acquisition. While Nvidia (NASDAQ:NVDA) clearly remains the favored player in this sector, investor fatigue with other mega-cap chip names appears to be boosting Broadcom’s appeal.

At the time of writing, AVGO stock trades just above $150 per share, with a market cap of $705 billion. Market analysts continue to praise Broadcom for its leadership in the semiconductor industry and infrastructure software and commended its strategic product portfolio. So, could AVGO be among the next stocks to hit a $1 trillion valuation, given it’s within a 50% move of hitting this target.

Currently well-positioned for more growth, AVGO stock is seeing strong growth courtesy of its AI and cloud computing exposure. The company’s strong R&D investments and recurring revenue from infrastructure software support a solid business model. Additionally, Broadcom’s recent VMware acquisition is expected to boost growth by integrating key AI tools. Broadcom’s strategy to lead in critical markets with high switching costs supports a positive long-term investment outlook.

Super Micro Computer (SMCI)

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Super Micro Computer (NASDAQ:SMCI) is another key beneficiary of the recent AI boom. Once a niche player, its liquid-cooling technology now supports 30% of data center operations. Recently, SMCI achieved $3 billion in quarterly revenue, higher than its 2021 annual total, reflecting record demand for its solutions.

Analysts predict the AI market will surge from $200 billion to over $1 trillion by 2030, boosting Super Micro Computer’s prospects. Unlike Nvidia, which relies on new product releases for revenue, SMCI benefits by integrating new chips from major manufacturers like Nvidia and AMD (NASDAQ:AMD) into its products. This path has driven the firm’s growth to five times the industry average. As AI advances and new chips launch, Super, Micro Computer’s diversified strategy positions it for continued success, independent of any single chipmaker’s performance.

Benefiting from AI growth, Super Micro Computer may offer better long-term returns than Nvidia. With a forward price-earnings ratio of 24-times versus Nvidia’s 43-times, it’s a promising, undervalued AI investment.

Palo Alto Network (PANW)

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Palo Alto Networks (NASDAQ:PANW) is a top cybersecurity stock which has surged 350% in the past 5 years. The company’s Q1 results were impressive, with earnings per share coming in at $1.32 and revenue reaching $1.98 billion. As interest rates decline, the company anticipates increased cybersecurity spending.

Driven Technologies earned Palo Alto Networks’ NextWave Diamond Innovator status, joining a select group of top channel partners. This recognition highlights Driven Technologies’ extensive cybersecurity solutions, including AI-managed services. Its Chief Executive Officer Rudy Casasola emphasized that this status affirms their team’s industry-leading expertise and use of Palo Alto Networks’ advanced tools.

In the cybersecurity sector and a market full of start-ups, Palo Alto Network has made a notable shift in consolidating the sector with tight competition. PANW CEO Nikesh Aurora notes that since he took over in 2018, the company has emerged as a platform that offers integrated solutions for a more secure access service edge. Thus, for those bullish on the cybersecurity space, this remains a top pick worth considering on dips moving forward.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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