Billionaire Steve Cohen Is Selling This Hot Artificial Intelligence (AI) Stock

Core Viewpoint - Broadcom is experiencing significant interest as an AI stock, with a 60% increase in its share price in 2023, but concerns arise regarding its ability to sustain this momentum due to mixed performance across its business segments [1][8]. Company Performance - Broadcom's revenue increased by 47% year over year in Q3 fiscal year 2024, but this figure drops to just 4% when excluding the impact of the VMware acquisition [8]. - The ethernet switch business has seen over 300% year-over-year growth, while AI accelerators have increased by over 250% [7]. - Despite strong growth in certain areas, Broadcom's overall performance is diluted by underperforming segments [7]. Market Position and Valuation - Broadcom's forward price-to-earnings (P/E) ratio is 24, which is higher than competitors like Meta Platforms (23.07), Alphabet (20.12), and Taiwan Semiconductor (21.87) [10]. - Analysts expect 17% revenue growth and 28% earnings per share growth for FY 2025, but there are concerns that expectations may be overly optimistic [9]. Investment Sentiment - Point72, led by billionaire Steve Cohen, reduced its Broadcom holdings by two-thirds, indicating a lack of confidence in the stock's continued performance [2][3]. - The mixed performance and high valuation compared to peers may lead investors to consider alternative stocks in the AI sector [11].