The magnificent seven, a group of stocks containing Alphabet (parent company of Google), Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla, have been the main drivers of market returns in the last couple of years.
However, a new company has emerged in this group of top companies. That is Broadcom (AVGO).
The company’s recent price rally, its strong earnings, along with Tesla’s troubles, have made the market consider whether Broadcom could be a member of the Magnificent Seven group.
Broadcom’s ascent to the Magnificent Seven
Broadcom’s stock has experienced an impressive rally, climbing over 340% since the beginning of 2023.
This remarkable growth has propelled the company into an exclusive group of corporations that have a $1 trillion market capitalisation.
In contrast, Tesla Inc., one of the original “Magnificent Seven” stocks, has seen its shares decline by 22% this year.
This downturn follows Chief Executive Officer Elon Musk’s increased involvement in U.S. politics, which has contributed to a negative reaction towards the electric vehicle manufacturer.
Looking ahead, analysts compiled by Bloomberg anticipate strong sales growth for Broadcom, projecting a 22% increase in fiscal 2025 and another 21% in fiscal 2026.
This growth trajectory is second only to Nvidia Corp. among the Magnificent Seven.
Meanwhile, Tesla’s revenue is expected to contract by 1% this year.
The “Magnificent Seven” gained prominence as they collectively propelled the S&P 500 higher starting in early 2023.
Their gains were attributed to their dominant market positions, which consistently generated robust revenue and profit growth.
However, in recent months, the performance of these stocks has diverged.
This shift comes amidst uncertainties, including U.S. President Donald Trump’s tariff policies and specific company concerns.
Four of the seven stocks have declined year-to-date, with Apple experiencing the most significant drop due to investor concerns about its AI strategy and exposure to the Chinese market.
After two years of explosive growth, the stock has moderated to an 8% growth in 2025.
However, this was enough to power the stock to a $1.2 trillion market capitalisation, which made it the seventh most valuable company in the S&P 500, ahead of Tesla and Berkshire Hathaway.
AI bolsters Broadcom
Broadcom has seen its financial performance significantly bolstered by substantial investments in artificial intelligence computing equipment.
This robust demand for AI infrastructure has directly fueled a surge in the company’s revenue and profits.
The company’s custom chip design and networking semiconductor businesses are major drivers of its revenue growth.
This made the company a big beneficiary of AI spending.
Under the Chief Executive Officer Hock Tan, the company made a couple of acquisitions, which expanded its business segments to wifi and Bluetooth chips, which are used in iPhones.
Broadcom also makes products in server virtualization and cybersecurity software.
The AVGO shares currently trade at 33 times its forward earnings, which is expensive compared to the broader market and most of the Magnificent Seven stocks.
Recently, Broadcom’s president sold $2.5 million worth of stock.
Broadcom in its Q2 earnings posted 46% growth in its AI revenue and expects it to grow at 60% in the third quarter.
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