The benchmark S&P500 is trading at an all-time high, driven in part by a strong earnings season in the first quarter of 2024. According to FactSet, nearly 80% of companies have delivered better results year to date than Wall Street expected.
Earnings season is currently winding down, but some leading companies have yet to report. CrowdStrike (NASDAQ: CRWD) And Broadcom (NASDAQ:AVGO) have a strong track record of operational success – which is why their respective share prices are at record highs – and will report their latest financial results in June.
This is why investors might want to buy into both companies next month and hold on for the long term.
1. CrowdStrike: cybersecurity based on artificial intelligence
CrowdStrike is a leading provider of cybersecurity software. Recognizing the increasing sophistication of modern threats, the company relies on artificial intelligence (AI) to do most of the heavy lifting when it comes to identifying, preventing and remediating security risks.
Employees are the most vulnerable part of any organization because they are constantly communicating with the outside world through emails, phone calls and messaging platforms. That’s why CrowdStrike says 90% of successful cyber attacks originate at the endpoint (computers and devices). But not every employee is a cybersecurity expert, so they can’t be expected to identify threats or correct incidents. Therefore, AI plays a crucial role in automating these processes in the background.
CrowdStrike’s Falcon platform is a holistic solution, with cloud security, identity protection and exposure management guiding industry-leading endpoint security. The company also launched Charlotte AI last year, a generative AI chatbot that saves cybersecurity managers two hours a day by speeding up workflows. It can answer questions about an organization’s security posture and quickly summarize incidents, saving hours of manual investigative work.
CrowdStrike’s AI models are trained on more than 2 trillion security events every day, making them among the most advanced in the industry.
CrowdStrike achieved record revenue of $3.06 billion in fiscal year 2024 (ending January 31), up 36% from the previous year. The company estimates that it will generate up to $3.99 billion in revenue in fiscal 2025, implying that growth can remain above 30% for another year. For context, Palo Alto Networks is one of CrowdStrike’s main rivals and is on track to grow its annual revenue by just 16% (although that business will bring in $8 billion, so it’s a much bigger operation).
Longer term, CrowdStrike expects to grow its annual recurring revenue to $10 billion within the next seven years by expanding its product portfolio and the regions in which it operates. Even then, the company will have barely scratched the surface of its addressable market, which it estimates could be worth $225 billion by 2028.
CrowdStrike will kick off fiscal 2025 with the release of first-quarter results on June 4, and provided the company continues to perform in line with its short- and long-term forecasts, investors could do well to take a long-term position. his stock.
2. Broadcom: A versatile AI game
When it comes to AI, few companies have as diverse exposure as Broadcom. Originally a semiconductor and electronics company that made products such as the optical mouse sensor (which eliminated the need for mouse pads) in the 1990s. But that changed in 2016 when Broadcom merged with another semiconductor giant called Avago Technologies, as the company has been on an acquisition spree ever since.
Broadcom bought semiconductor equipment supplier CA Technologies in 2018, cybersecurity company Symantec in 2019 and cloud software developer VMware in 2023. All told, Broadcom spent nearly $100 billion on the three deals, creating a conglomerate with a multi-faceted approach to AI.
On the semiconductor side, Broadcom makes data center switches that control how quickly data moves from one point to another. The Tomahawk 5 switch is one of the fastest in the industry, and when developers use thousands of graphics processing chips (GPUs) to train AI models, such hardware is very important.
Like many other cybersecurity companies, Symantec is integrating AI into its products to achieve better results. It worked together with Alphabet‘s (Google) VertexAI to speed up its development processes, and a chatbot called SymantecAI is now available to customers.
Finally, VMware allows companies to create virtual machines, meaning AI developers can distribute data center infrastructure across multiple workloads for maximum efficiency. For example, one user may only need 10% of a server’s capacity, so VMware allows multiple users to connect to the same server so it runs at 100%. Efficiency is extremely important because there is a shortage of the best hardware in the semiconductor industry Nvidia‘s GPUs.
Broadcom generated record revenue of $35.8 billion in fiscal 2023 (ending October 29), up 8% from 2022. But thanks to the inclusion of VMware’s financials, the conglomerate expects its revenue to increase over the course of will increase by almost 40% to $50 billion in the fiscal year. fiscal year 2024.
The first quarter (ended February 4) got off to a good start, with revenue growing 34%, and the company is expected to announce its second quarter results on June 12. Few stocks can offer investors exposure to AI in this area. as many different forms as Broadcom, so it could be a great addition to any long-term portfolio.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Alphabet, CrowdStrike, Nvidia, and Palo Alto Networks. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
2 Unstoppable Stocks to Buy Hand Over Fist in June was originally published by The Motley Fool
