Long-Term Investment Opportunities in AI Stocks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Source: NASDAQ.COM
- Market Leadership: Broadcom holds approximately 70% of the custom AI accelerator market, with AI revenue soaring 106% to $8.4 billion in Q1 2026, demonstrating its strong market position amid rising demand for AI infrastructure.
- Financial Resilience: Alphabet generated $60.4 billion in revenue in Q1 2026, a 19% year-over-year increase, and boasts $64.4 billion in free cash flow, showcasing its financial strength and capacity for sustained investment during market fluctuations.
- Technological Barriers: ASML commands nearly 100% of the extreme ultraviolet (EUV) lithography market, with its latest High NA machines costing over $400 million each, highlighting its irreplaceable role and high technical barriers in semiconductor manufacturing.
- Future Growth Outlook: ASML raised its full-year net sales projection to between €36 billion and €40 billion for 2026, with the midpoint reflecting a 16% increase from 2025, indicating ongoing demand and market potential in high-end chip production.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 426.580
Low
370.00
Averages
457.75
High
525.00
Current: 426.580
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Analysis of High-Yield Dividend ETF Investments
- Overview of High-Yield ETFs: The Vanguard High Dividend Yield ETF (VYM) includes 608 stocks with a current dividend yield of 2.24%, and while it has underperformed the S&P 500 over the past five years, it has outperformed it in 2026, indicating its potential for providing steady income during volatile periods.
- Portfolio Diversification: VYM's largest sector is financials (20.2%), followed by technology (14.8%) and industrials (14.2%), allowing investors to diversify risks across different economic sectors and reduce reliance on a single industry.
- Schwab Dividend ETF Performance: The Schwab U.S. Dividend Equity ETF (SCHD) holds 103 stocks with a dividend yield of 3.29%, and although its long-term performance has lagged behind VYM and the S&P 500, it has shown strong performance in 2026 with a year-to-date total return of about 17.8%.
- Considerations for ETF Selection: When choosing between VYM and SCHD, investors should consider diversification and safety, as VYM offers greater diversification with 608 stocks, while SCHD is more attractive in terms of dividend yield, making it suitable for those seeking stable income.
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- Expense Ratio Advantage: With an ultra-low expense ratio of 0.04% for the Vanguard ETF and 0.06% for the Schwab U.S. Dividend Equity ETF, both funds are competitively positioned for cost-conscious investors seeking steady income.
- Portfolio Diversification: The Vanguard ETF holds 608 stocks across various sectors, particularly in finance and technology, providing better diversification compared to the Schwab ETF's 103 stocks, thereby reducing single-sector risk.
- Dividend Yield Comparison: The Vanguard ETF offers a dividend yield of 2.24%, while the Schwab ETF provides a higher yield of 3.29%; despite the Schwab ETF's attractiveness in yield, the Vanguard's diversified portfolio may better withstand market fluctuations.
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- Rising Inflation Data: The Personal Consumption Expenditures Price Index (PCE) rose 3.8% year-over-year through April, marking the largest increase since May 2023, driven by higher energy prices amid the Iran war, which could prompt the Federal Reserve to consider interest rate hikes.
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- Escalation of US-Iran Conflict: Following weeks of paused action, the US and Iran have resumed airstrikes, complicating hopes for a permanent resolution to the conflict, which is impacting global oil supplies and market sentiment.
- Strong Stock Market Performance: Despite rising geopolitical tensions, both the S&P 500 and Nasdaq Composite closed at record highs, primarily driven by a surge in AI-related stocks, indicating strong market confidence in the technology sector.
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- Enhanced Product Competitiveness: The newly launched Claude Opus 4.8 outperforms all publicly available AI platforms in benchmark tests, marking Anthropic's disruptive competitiveness in the software industry, which could significantly impact existing enterprise software products.
- Cloud Infrastructure Expansion: Anthropic plans to allocate the $65 billion to expand its computing capacity to meet the growing demand for Claude, further solidifying its market position through partnerships with cloud service providers like Amazon and Google, which is expected to drive growth in cloud services.
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See More
Analysis of High-Yield Dividend ETF Investments
- Overview of High-Yield ETFs: The Vanguard High Dividend Yield ETF (VYM) includes 608 stocks with a current dividend yield of 2.24%, and while it has underperformed the S&P 500 over the past five years, it has outperformed it in 2026, indicating its potential for providing steady income during volatile periods.
- Portfolio Diversification: VYM's largest sector is financials (20.2%), followed by technology (14.8%) and industrials (14.2%), allowing investors to diversify risks across different economic sectors and reduce reliance on a single industry.
- Schwab Dividend ETF Performance: The Schwab U.S. Dividend Equity ETF (SCHD) holds 103 stocks with a dividend yield of 3.29%, and although its long-term performance has lagged behind VYM and the S&P 500, it has shown strong performance in 2026 with a year-to-date total return of about 17.8%.
- Considerations for ETF Selection: When choosing between VYM and SCHD, investors should consider diversification and safety, as VYM offers greater diversification with 608 stocks, while SCHD is more attractive in terms of dividend yield, making it suitable for those seeking stable income.
See More
Vanguard High Dividend ETF Underperforms S&P 500
- Long-Term Performance: The Vanguard High Dividend Yield ETF has an annualized return of 11.9% over the past five years, and while it has shown strong performance in 2026, it still lags behind the S&P 500, indicating relative weakness in market volatility.
- Expense Ratio Advantage: With an ultra-low expense ratio of 0.04% for the Vanguard ETF and 0.06% for the Schwab U.S. Dividend Equity ETF, both funds are competitively positioned for cost-conscious investors seeking steady income.
- Portfolio Diversification: The Vanguard ETF holds 608 stocks across various sectors, particularly in finance and technology, providing better diversification compared to the Schwab ETF's 103 stocks, thereby reducing single-sector risk.
- Dividend Yield Comparison: The Vanguard ETF offers a dividend yield of 2.24%, while the Schwab ETF provides a higher yield of 3.29%; despite the Schwab ETF's attractiveness in yield, the Vanguard's diversified portfolio may better withstand market fluctuations.
See More
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- Job Report Impact: The monthly employment report due on June 5 is expected to show an unemployment rate of 4.3% and an increase of 96,000 jobs; however, if job growth exceeds 150,000, it may raise concerns about an overheating economy, impacting stock market performance.
- Rising Inflation Data: The Personal Consumption Expenditures Price Index (PCE) rose 3.8% year-over-year through April, marking the largest increase since May 2023, driven by higher energy prices amid the Iran war, which could prompt the Federal Reserve to consider interest rate hikes.
- Optimistic Semiconductor Outlook: Broadcom's (AVGO.O) quarterly results are set to be released on Wednesday, with market optimism surrounding chipmaker profits amid a massive AI infrastructure buildout, leading to a surge of approximately 80% in semiconductor stocks over recent weeks.
- Interest Rate Rise Risks: Although U.S. Treasury yields have slightly retreated, with the 10-year yield around 4.46%, rising yields pose risks for equities as they may increase borrowing costs for consumers and businesses, necessitating investor vigilance regarding sustained interest rate increases.
See More
US-Iran Conflict Escalates, Oil Prices Surge Amid Economic Uncertainty
- Escalation of US-Iran Conflict: Following weeks of paused action, the US and Iran have resumed airstrikes, complicating hopes for a permanent resolution to the conflict, which is impacting global oil supplies and market sentiment.
- Strong Stock Market Performance: Despite rising geopolitical tensions, both the S&P 500 and Nasdaq Composite closed at record highs, primarily driven by a surge in AI-related stocks, indicating strong market confidence in the technology sector.
- Oil Price Warning: ExxonMobil has warned that oil inventories are on track to reach dangerously low levels in the coming weeks, forcing prices to spike and curbing demand, reflecting market concerns over energy supply.
- Wealthy Investors Pulling Out: According to the UBS Global Family Office Report, 60% of family offices plan to adjust their investment allocations in the next year, with many reducing US holdings and increasing exposure to emerging markets, highlighting a growing trend of 'de-dollarization'.
See More
Anthropic Raises $65 Billion, Valued at $965 Billion
- Record Funding: Anthropic successfully raised $65 billion in its latest funding round, achieving a post-money valuation of $965 billion, making it the most valuable AI start-up globally, surpassing OpenAI and reflecting strong market confidence in its technology.
- Significant Revenue Growth: The company's revenue run rate reached $47 billion this month, making its valuation based on sales multiples appear reasonable, indicating its competitive strength in the software industry and potentially triggering further consolidation and competition within the sector.
- Investor Returns: Amazon and Alphabet's stakes in Anthropic are now valued at over $100 billion, with Amazon's investment increasing from $60 billion to $120 billion, showcasing their strategic positioning and potential returns in the AI landscape.
- Cloud Infrastructure Expansion: Anthropic plans to allocate $65 billion towards cloud infrastructure services, including agreements with Amazon and Google, which is expected to significantly enhance its computing capacity to meet growing market demand, further solidifying its market position.
See More
Anthropic Surpasses OpenAI to Become World's Most Valuable AI Startup
- Record Funding Round: Anthropic successfully raised $65 billion in its latest Series H funding, achieving a valuation of $965 billion and surpassing OpenAI, more than doubling its previous valuation of $380 billion from February, indicating strong growth potential in the AI sector.
- Enhanced Product Competitiveness: The newly launched Claude Opus 4.8 outperforms all publicly available AI platforms in benchmark tests, marking Anthropic's disruptive competitiveness in the software industry, which could significantly impact existing enterprise software products.
- Cloud Infrastructure Expansion: Anthropic plans to allocate the $65 billion to expand its computing capacity to meet the growing demand for Claude, further solidifying its market position through partnerships with cloud service providers like Amazon and Google, which is expected to drive growth in cloud services.
- Significant Investor Gains: Early investors Amazon and Alphabet have committed to investing $20 billion and $40 billion respectively, with their investments potentially exceeding $100 billion in value, reflecting strong confidence in the AI market and expectations for future growth.
See More
