Broadcom Stock And 2 AI Infrastructure Picks With Strong Earnings Growth

Global bond yields are staying high as central banks keep policy tight to tackle stubborn inflation. That makes borrowing more expensive and filters through to almost every asset class. In this setting, companies that are expected to grow earnings strongly and keep their balance sheets in reasonable shape look especially interesting. This article highlights three stocks from our Healthy high growth potential screener that fit that profile.

The stocks covered below are just a small sample from this idea, with the full screen surfacing 1,549 more companies that analysts expect to grow earnings strongly while keeping financial positions within set criteria. To scan that wider opportunity set, analyze and identify your own highest conviction ideas directly in the Healthy high growth potential screener.

Broadcom (AVGO)

Overview: Broadcom is a large US technology company that designs high performance chips for data center networking and AI infrastructure, alongside a sizeable infrastructure software portfolio through VMware that supports private cloud and enterprise workloads. The Semiconductor Solutions segment, including Ethernet switches, NICs and PCIe switches for AI and cloud data centers, is the clearest link to the Healthy high growth potential theme.

Operations: Broadcom generates about US$47.8b in revenue from Semiconductor Solutions, including intellectual property licensing, and about US$27.7b from Infrastructure Software.

Market Cap: US$1.75t

Investors looking at the Healthy high growth potential theme may find Broadcom interesting because its high performance data center and AI networking chips are paired with infrastructure software that can support recurring revenue and earnings growth. Forecast earnings growth of about 33.7% a year over the next 3 years, high profitability metrics such as a net margin near 38.8% and strong ROE, plus large AI orders and long term contracts with major cloud customers, all point to a business with meaningful earnings power. At the same time, high leverage, significant recent insider selling and a rich P/E mean expectations are high, so execution on AI infrastructure demand and debt management will be important to watch.

Broadcom’s AI engine is accelerating; however, high leverage, a rich P/E, and those insider sales leave key questions unanswered. Get the full picture with the 4 key rewards and 2 important warning signs

Oracle (ORCL)

Overview: Oracle is a global enterprise software and cloud company that helps businesses, governments and institutions run core systems using its Oracle Cloud applications such as Fusion Cloud ERP, HCM, SCM, NetSuite and its Oracle Cloud Infrastructure platform including Autonomous Database.

Operations: Oracle generates about US$58.5b from Cloud and software, compared with around US$5.7b from Services and US$3.1b from Hardware.

Market Cap: US$434.5b

Oracle may be worth a close look if you want exposure to earnings that are tied to cloud migration and AI workloads rather than only to legacy software maintenance. The key driver is its Oracle Cloud SaaS suite and OCI infrastructure, which underpin recurring subscription revenue and long term contracts that contribute to the Healthy high growth potential theme. At the same time, heavy AI data center investment and a sizeable debt load raise questions about cash flow timing, dividend flexibility and how quickly its AI related backlog converts into revenue. If the balance between rapid cloud expansion and funding risk is important to you, Oracle is a company to study more closely.

Oracle’s cloud and AI momentum is accelerating, and the real story lies in how that growth interacts with its debt and cash flows. Get the full context in the analysis report for Oracle

Space Exploration Technologies (SPCX)

Overview: Space Exploration Technologies operates reusable rocket launch services, Starlink satellite broadband and an AI platform that includes the Grok model, enterprise AI offerings and the X social platform. The clearest fit with the Healthy high growth potential theme is Starlink, which provides satellite based internet to consumers, businesses and governments and supports expectations for strong earnings growth through subscriber scale and multi year contracts.

Operations: Space Exploration Technologies generates about US$13.9b from Connectivity, US$5.1b from AI and US$4.1b from Space operations.

Market Cap: US$1.95t

Investors watching Space Exploration Technologies should focus on how Starlink’s large and growing connectivity base, together with expanding AI compute and platform revenue, supports forecasts for rapid earnings growth over the next few years. The company is still reporting losses and has a short cash runway, so the growth story relies on Starlink staying profitable and scale eventually offsetting heavy launch, data center and chip plant investment. That mix of strong top line growth, multi year contracts with consumers, enterprises and governments, and experienced governance creates a long term earnings narrative that some investors may find appealing. At the same time, valuation, dilution risk after IPO lockups and dependence on external funding mean this stock may be more suitable for investors who are comfortable with higher volatility around that growth path.

Space Exploration Technologies is racing ahead on Starlink and AI, yet the real story lies in how that growth aligns with funding needs and losses. Get the full earnings story in the analyst forecasts for Space Exploration Technologies

Seeking Fresh Alternatives Beyond These Picks

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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