TSP Weekly Tech Stock Update—Dec 14, 2024
This Week: Broadcom leaps into AI spotlight, 2 new Reddit bulls, MongoDB earnings review, GOOGL/NOW/AAPL new all-time highs, UBS likes NTNX, Macquarie bullish on GTLB, Truist upbeat on DDOG & more.
Hello from Rob…
—Back in March 2024, I added Broadcom (AVGO, $224.80) to the TSP Vulture Portfolio—when the stock was trading at $126.70 split-adjusted—because I liked the expanding AI exposure on the semiconductor side of the business and the growth potential of the diversified software portfolio after the VMware acquisition.
So far, the story is playing out well. Broadcom ended FY’24 (Oct.) with AI revenue of $12.2 billion, up 220% year over year. In FQ4 (Oct.), VMware’s annualized booking value (ABV) rose to $2.7 billion from $2.5 billion in the previous quarter; ABV is forecasted to exceed $3 billion in the January quarter. Since the closing of the VMware acquisition just over a year ago, Broadcom has signed up more than 4,500 of its 10,000 largest customers for VMware Cloud Foundation.
On Friday, Broadcom shares jumped 24% after CEO Hock Tan gave a very bullish multi-year AI revenue outlook. Read more about Broadcom inside this issue.
*Since Reddit (RDDT, $172.65) delivered a breakout Q3 earnings report in late October, the stock has surged 111%. On Monday, the shares hit a new post-IPO high of $180.74. The company went public in March 2024 at $34 share.
This week, Wells Fargo initiated Reddit at ‘Overweight’ with a price target of $206 based on potential ad monetization upside. The firm looks for continued positive estimate revisions, saying the market does not fully appreciate Reddit’s near-term monetization improvement opportunity. Wells Fargo estimates that 60% of Reddit engagements are monetizable.
Also this week, Morgan Stanley upgraded Reddit to ‘Overweight’ with a target of $200. The firm thinks Reddit is still in the early stages of growth. It expects engagement and ad pipelines to drive industry-leading user, time spent and ad revenue growth. As user numbers increase and time spent per user grows, Morgan Stanley sees a boost for ad pricing as well as upside to ad load.
Sign up for a paid subscription to read more about Reddit in the December 2024 PDF of Tech-Stock Prospector (TSP #274).
*Inside This Issue: MongoDB Shares Stumble Again
—Paid subscribers will receive the January 2025 PDF of Tech-Stock Prospector (TSP #275) via email on Tuesday, January 7.
—Paid subscribers have access to the TSP Market Overview and TSP Portfolio Updates sections inside this issue.