A Leading Hedge Fund Just Placed Massive Bets on Broadcom and Intel Stocks. Should You Follow Suit?

Broadcom (NASDAQ: AVGO) and Intel (NASDAQ: INTC) have produced quite different results for their shareholders so far in 2026. Broadcom is lagging the market with a gain of just 3%. Meanwhile, Intel has soared by over 135%. However, what matters for investors now is what's coming for those chipmakers over the next few years.

That's the kind of thinking that motivated Coatue Management, run by billionaire Philippe Laffont, to buy shares of both of these companies in the second quarter. Coatue Management increased its Broadcom stake by 6% in Q2, and it now makes up about 4.5% of the fund's holdings. Intel was a brand new position, and Laffont made it a meaningful one: It now accounts for about 3.5% of the portfolio. That's a fairly sizable chunk of the hedge fund's holdings in two stocks, but are they worth buying at their current prices?

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The market is looking toward the future with these two

If you use a valuation metric like the trailing price-to-earnings (P/E) ratio, both of these stocks look horribly overvalued. Intel doesn't even have a P/E ratio because it has been unprofitable over the past year, while Broadcom trades at 60 times earnings. That makes these two a head-scratching investment, at least from this perspective.

But Laffont and Coatue Management aren't buying these two stocks for what they are; they're buying them for what they can turn into.

For Broadcom, its custom artificial intelligence (AI) chip business is on course to take off in 2027. More and more hyperscalers are partnering with Broadcom to develop application-specific integrated circuits (ASICs) to handle some of their AI workloads.

These devices are far less flexible than graphics processing units (GPUs), but they can be more efficient and more cost effective when used for properly configured workloads of the type that they're designed to handle. This gives hyperscalers more computing power and bandwidth at a lower price. Broadcom management told investors that 2027 will be a year of incredible growth, as several of its clients plan to start churning out the custom AI chips it helped them design next year. Management believes that its AI semiconductor division will generate over $100 billion in revenue in 2027, a major increase from current levels.