Forget a Recession: Broadcom (AVGO) and Alphabet (GOOG) Are Growth Stocks To Buy Hand Over Fist

Recession fears remain high, with the stock market taking a significant breather to start 2025. After entering correction territory approximately one week ago, the S&P 500 has since made back most of its recent losses, now down around 3% on the year as investors appear to still be willing to buy any and all dips.

That said, it’s becoming clearer to some investors that the overarching up trend we’ve seen in recent years may not be as sustainable as in the past. From tariff concerns to expectations that growth could slow, geopolitical conflicts ratcheting up, and concerns around fundamentals and valuations in this market, there are reasons why many investors are looking to sit on the sidelines, or rotate some of their capital into more defensive asset classes.

That’s a fair view, and I’ve written in the past around specific stocks and sectors that could benefit from a rotation trade out of growth and into more defensive areas of the market.

However, for investors looking to put some capital to work in companies with above-average growth rates (and business models that are inherently defensive in their own right), there are a few options I think stand out among the rest. Here are two of my top growth picks in this market right now, and why I think investors may not want to sleep on these names.

Broadcom (AVGO)

Broadcom (NASDAQ:AVGO) has been a top performer in recent years, with the company’s stock price surging more than 780% over the past five years. This move has pushed the company’s market capitalization to nearly $900 billion, with many investors still on watch to see if the top chip maker can move past the $1 trillion threshold (and stay there) moving forward. 

Unlike Nvidia and AMD, Broadcom has focused on balancing its AI growth potential with networking and infrastructure software. This strategy has been strengthened by Broadcom’s VMware acquisition, and is also supported by demand for the the company’s networking, storage, and wireless solutions across enterprise and residential markets.

A diversified business model is important, especially in this environment. However, that’s not to say that growth investors aren’t honing in on the company thanks to its AI levers the management team is pulling to generate impressive growth.

In fact, the company’s  AI chip and networking sales hit $4.1 billion last quarter, up 77% year-over-year. Importantly, that number also surpassed expectations by $300 million. Strong cloud demand drove a good portion of this growth, with hyperscalers investing in next-gen AI models. Additionally, Broadcom has continued to increase its R&D efforts to develop advanced AI processors for expanding workloads.

Broadcom had three hyperscale cloud customers using its AI chips and aligned R&D efforts with them through 2027, targeting a $60-$90 billion revenue opportunity. The company also engaged with two more hyperscalers for custom AI accelerators and added two new cloud customers, expanding its growth potential beyond initial projections.

The company expects AI-related revenue to reach $17-18 billion for the fiscal year, driven by rising demand for AI infrastructure and its growing market share in AI ASIC chips. In Q1 2025, Broadcom reported a 25% year-over-year revenue increase, reaching $14.92 billion, with AI-related revenue surging 77% and infrastructure software revenue climbing 47%. Looking ahead, Q2 revenue is projected at $14.9 billion, slightly exceeding analyst expectations.

With these sorts of growth metrics out there, I expect continued strong demand for Broadcom’s shares, and this is a stock I’ll be watching closely from here. 

Alphabet (GOOG)

Alphabet (NASDAQ:GOOG) could be one of the most attractive “Magnificent Seven” stocks in the market, at least in my view. Yes, the company hasn’t seen the kind of outsized growth other names in this group have over the past five years. However, a return of 150% over this time frame has beaten the S&P500 by a rather wide margin, and indicates exactly why so many growth investors continue to hold the search and online advertising giant.

Alphabet is a unique growth stock in that the company’s core business (its Google search division) continues to provide strong cash flow growth. But the company’s cloud division and other high-growth businesses tied into the world of online advertising have continued to be the key growth drivers many investors look to as reasons to own this stock. That’s to say nothing about the company’s AI-related growth prospects, with the company’s revenue surging 30% to $12 billion in Q4, fueled by demand for AI infrastructure and generative AI solutions.

Notably, Alphabet’s recent dip has contributed to the lowest forward price-earnings ratio among its peer group, at around 19-times. That makes this stock a bargain, at least in my books, given the fact that the company’s revenue is expected to grow right around 15%. And if the company can produce the kind of earnings growth it has in the past (last year bringing in net income growth of 35%), then this multiple simply doesn’t make sense. 

I’m of the view that Google Cloud and the company’s AI-related growth acceleration drivers could drive strong returns over the long-term. I’ll be keeping an eye on the company’s operating margins moving forward and its relative growth rate of course. But over the long-term, GOOG stock has driven strong returns for growth investors, and I don’t expect that to change anytime soon. Maybe less volatile growth, but very strong growth, should be valued much more highly by the market in the quarters to come, in my view. 

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