Broadcom Enters the Chat: Wall Street Weighs Magnificent Seven Status

• Broadcom Inc. (AVGO) has surged 340% since 2023, reaching a $1.2 trillion market cap, driven by AI-related chip and networking businesses, positioning it as a potential Magnificent Seven member.
• Analyst estimates project Broadcom’s sales to grow 22% in fiscal 2025 and 21% in 2026, second only to Nvidia (NVDA), while Tesla Inc. (TSLA) faces a 1% revenue decline and a 22% stock drop in 2025.
• Despite trading at 33 times forward earnings, Broadcom’s diversified portfolio and AI growth contrast with Tesla’s challenges, prompting calls for a “Magnificent Eight” to include both, as noted by Bloomberg.

Broadcom Inc. (AVGO) has emerged as a formidable contender among the elite technology stocks, prompting Wall Street to reconsider the composition of the so-called Magnificent Seven, according to a Bloomberg report. With a market capitalization of nearly $1.2T/$255.02, Broadcom now ranks as the seventh most valuable company in the S&P 500 Index (SPX), surpassing Tesla Inc. (TSLA) and Berkshire Hathaway Inc. (BRK-A, BRK-B). The chipmaker’s ascent, driven by a 340% stock rally since the start of 2023, reflects its pivotal role in the artificial intelligence (AI) boom, positioning it as a potential replacement for Tesla in the exclusive group that includes Nvidia Corp. (NVDA), Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT), Meta Platforms Inc. (META), and Alphabet Inc. (GOOG, GOOGL).

Broadcom’s revenue growth is fueled by its custom chip design and networking semiconductor businesses, which have capitalized on relentless AI infrastructure spending. Analyst estimates compiled by Bloomberg project Broadcom’s sales to surge 22% in fiscal 2025 and 21% in fiscal 2026, trailing only Nvidia among the Magnificent Seven. This robust outlook underscores the company’s strategic acquisitions under CEO Hock Tan, which have diversified its portfolio to include wifi and bluetooth chips for devices like iPhones, as well as server virtualization and cybersecurity software. In contrast, Tesla’s revenue is expected to decline 1% this year, compounded by a 22% stock drop in 2025 amid controversies surrounding CEO Elon Musk’s political engagements.

The Magnificent Seven, a term popularized in early 2023 by Michael O’Rourke, chief market strategist at Jonestrading, has been a cornerstone of the S&P 500’s (SPX) gains, driven by the group’s dominant market positions and strong financial performance. However, recent divergences, exacerbated by uncertainties like U.S. President Donald Trump’s tariff policies, have seen four of the seven stocks decline year-to-date, with Apple Inc. (AAPL) facing scrutiny over its AI strategy and China exposure. Broadcom, despite a modest 8% stock rise in 2025 following two years of doubling in value, trades at a premium valuation of 33 times forward earnings, higher than most of its peers and the broader market. This valuation faced pressure after Broadcom’s recent earnings report fell short of investor expectations, despite a 75% stock gain from an April low.

Broadcom’s case for inclusion in the Magnificent Seven is bolstered by its operational success and market performance. Michael Cuggino, president and portfolio manager at Permanent Portfolio Family of Funds, which holds Broadcom, highlighted to Bloomberg the company’s strong business prospects and recent results as justification for its elite status. Yet, some argue for expanding the group rather than replacing Tesla. Mark Werner, a portfolio manager at Laffer Tengler Investments Inc., which holds both Broadcom and Tesla, suggests that Tesla’s advancements in robotics and AI warrant its continued inclusion, proposing a “Magnificent Eight” to reflect the evolving tech landscape.

The debate highlights the dynamic nature of market leadership, where Broadcom’s AI-driven growth challenges the established narrative of the Magnificent Seven. While its high valuation raises concerns, the company’s strategic positioning in AI infrastructure and diversified portfolio make it a compelling addition to the conversation.

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