Broadcom Inc (NASDAQ: AVGO) is in focus this morning following a 13F securities filing that confirmed billionaire David Tepper has been loading up on AVGO shares as means of AI exposure.
Tepper’s conviction in Broadcom stock is significant given he’s actually been trimming his stakes in three of the most prominent artificial intelligence hardware names, AMD, TSMC, and NVDA, to grow his position in AVGO.
The filing arrives on the heels of a 100% increase in Broadcom share price, which has even pushed the company’s market cap well over the coveted $1 trillion mark.
Tepper’s shift signals a strategic recalibration in AI exposure, favouring diversified resilience over concentrated GPU bets.
Why is Broadcom stock Tepper’s pick for AI exposure?
AVGO stock’s appeal lies in its unique position within the AI ecosystem.
Unlike Nvidia or AMD, which dominate the GPU market, Broadcom specializes in AI networking hardware – critical for connecting thousands of GPUs to optimize performance and reduce latency.
Its custom AI chips have also attracted major hyperscaler clients, with CEO Hock Tan projecting potential client spending of up to $90 billion by fiscal 2027.
But what likely draws billionaire David Tepper’s interest the most is AVGO’s diversified revenue base.
Beyond AI, it maintains strong footholds in wireless chipsets for smartphones, industrial solutions, and enterprise cybersecurity.
This multi-pronged business model offers insulation against volatility if AI enthusiasm cools, making Broadcom shares a more balanced long-term play.
Are AVGO shares better priced in the back half of 2025?
Another reason that Tepper is betting on Broadcom stock while trimming the likes of NVDA may be valuation.
At the time of writing, AVGO shares are going for a price-to-sales (P/S) multiple of about 27 only, according to data from Barchart, whereas Nvidia stock is significantly more expensive at nearly 34.
Plus, Broadcom’s revenue growth is supported by multiple streams, not just artificial intelligence.
This makes its valuation more sustainable and less vulnerable to a potential correction in AI-related stocks.
Simply put, Tepper’s investments suggest he sees AVGO as a better risk-adjusted pick to play the AI market.
A 0.77% dividend yield makes Broadcom Inc. even more attractive to own for the long term.
How Wall Street recommends playing Broadcom shares
Appaloosa Management’s latest portfolio moves reflect broader skepticism toward AI exuberance.
While NVDA, AMD, and TSMC have so far been central to the AI boom, their valuations and concentrated exposure may be too frothy for a seasoned investor like Tepper.
In contrast, AVGO shares, with diversified business and strategic AI positioning, offer a more grounded alternative.
Investors should also note that Tepper’s optimism on Broadcom stock is widely shared by Wall Street analysts.
The consensus rating on the AI stock remains at “buy” with price targets going as high as $400 – indicating potential upside of another 32% from current levels.
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