What's The Next AI Winner After Broadcom?
Shares of Broadcom, Inc. (AVGO) closed at $250 Monday, up nearly 40% since the company reported earnings last week. As a major supplier of custom chips and interconnects for AI workloads in datacenters, Broadcom has profited from the AI boom.
Looking For Pin Action
"Pin action", a phrase traders borrowed from bowling, refers to the knock-on effects one can find after a big movement in a particular stock. In the case of Broadcom, we'd expect to see pin action in the AI sector, and we've seen some already. In a post on our trading Substack on Monday, we shared four trade ideas, three of which had an AI angle.
Our Four Trade Ideas
As we described them there:
A top names trade. This stock was the #1 name in our daily ranking on Friday. It’s a software platform for advertising with an AI angle (using AI to match users and ads). It beat earnings on top and bottom lines last month, but has pulled back since (all else equal, the empirical data tracked by Portfolio Armor’s securities ranking algorithm suggests short-term pullbacks tend to be bullish). If we’re right on this trade, our max gain would be about 200%, and our max loss would be 100% if we’re wrong.
A speculative crypto-related trade. A successful trader I follow on X thinks this stock has a shot of doubling as Bitcoin makes new highs. Our trade is a bet on the stock climbing 50% over the next month. If we’re right, our max gain would be about 500%, and if we’re wrong, our max loss would be 100%.
An AI-related post-earnings trade. Another software stock with an AI angle. This one beat earnings on top and bottom lines recently, and looks like it could keep climbing in the near term. Our max upside on this one is uncapped, and our max downside is 100%.
An AI-related earnings trade. This one’s a hardware stock. Our max upside on this one is about 200%, and our max downside is 100%.
One Winner Out Of The Gate
Trade idea #3 was buying the $30 strike calls expiring on January 17th on Asana, Inc. (ASAN), for $0.25. Asana runs a work management platform that uses AI to automate repetitive tasks and reduce workflows. The stock spiked nearly 14% on Monday, enabling us to cash out half of our calls at a nice profit on the same day.
- Calls on Asana (ASAN 12.99%↑). Bought at $0.25 on 12/16/2024; sold (half) at $1.15 on 12/16/2024. Profit: 360%.
For Monday's other AI trades, you can click on our trade alert above, and if you'd like a heads up when we place our next one, you can subscribe to our trading Substack/occasional email list below.
If You're More Concerned With Downside Risk
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And if you'd like a heads up when we place our next trade, you can subscribe to our trading Substack below.
If you'd like to stay in touch
You can scan for optimal hedges for individual securities, find our current top ten names, and create hedged portfolios on our website. You can also follow Portfolio Armor on X here, or become a free subscriber to our trading Substack using the link below (we're using that for our occasional emails now).
