Here's the AI Chip Stock That Hedge Funds Are Loading Up On

Hedge funds flipped from shorting AVGO in August to holding it as one of their most-owned positions in September, a sharp reversal in positioning over a single month.

The catalyst was Broadcom's Q3 earnings. AI semiconductor revenue jumped 221% year-over-year to $16.7 billion, the figure that appears to have driven funds to cover shorts and build longs.

Valuation remains the central debate. AVGO has delivered a 59% annualized return over three years, which fuels concern that the run has already priced in the AI story. Analysts countering that view point to a forward P/E of 19 and growth projections extending through 2028, arguing the multiple still looks reasonable against the earnings trajectory.

Interpretation: a short-to-long swing in one month suggests the earnings print forced funds to rethink the bear case rather than gradually rotating. A forward P/E of 19 for a stock with this growth profile is the core of the bullish argument, though a 59% annualized three-year gain leaves less room for disappointment.