2 Stocks to Benefit from Smartphones

Broadcom (BRCM) and NVIDIA (NVDA) are two chipmakers making solid moves. The two companies are seeing strong growth in their businesses. As a result, investors should definitely take a closer look at them.

A Look at Broadcom

Broadcom's infrastructure and networking businesses saw strength in the quarter driven by continued growth in its switching business, particularly in the service provider and data center markets. The growth in the service provider market was across both switch and processor families driven by LTE build-outs particularly in China.

It witnessed sequential growth in sales into access points and consumer entertainment devices for the connectivity segment. On the product front, it introduced location and NFC solutions targeted for wearables that reduce power consumption by 75% and 60%, respectively.

Several new wearable products based on Broadcom Solutions continue to come to market. For instance, Samsung recently launched the Gear 2 and Gear Fit, both powered by Broadcom. It also introduced the industry's first six stream 5G Wi-Fi MIMO platform for home networks for access points. These are up to 50% faster than anything in the market today.

However, its mobile and wireless business is slowing down slightly. For the full year it continues to see the profile of its mobile and wireless revenue to be more weighted towards the second half. This change in the seasonal profile of the business is being driven primarily by the continued raft of new connectivity technologies including 2x2 and 5G Wi-Fi as well as the ramp up of its LTE business.

Broadcom continues to see strong momentum in VDSL and PON sales due to share gains, increased operator spending and new operator service launches. There's momentum in its DSL business in North America, Europe and Latin America. Continued global share gains in PON and continued unit growth are also demonstrated driven principally by China.

Its set top box business continues to perform well. The shift towards client server deployments has resulted in content gains in developed countries which carry more Broadcom content in tuners and networking. The market is continuously drifting towards Ultra HD along with HEVC, which will drive richer content in the set top box for years to come. The deepening digital penetration and arrival of new designs to market in Russia, Europe, Central and South America are bound to drive share gains overseas.

There's strengthening momentum in the small cell field. It started shipment of production volume of its first LTE Small Cell Solutions into several operators worldwide for the quarter. To date it has shipped more than 2 million small cells and has LTE design engagements with more than 20 OEMs and operators. Its broadband business is expected to rise sequentially, driven by broad strength across both set top box and broadband access.

What About NVIDIA

NVIDIA has also diversified its business into automotive and mobile segment thus crating tremendous opportunity for the company to grow in the future. For example, Audi launched its Tegra-powered A3 in the U.S. that is integrated with NVIDIA's graphic Tegra that showed handsome growth for the third consecutive quarter in line. Further, the company is engaged in bringing in many new innovative graphics in ecosystem with Jetson TK1 — a development platform targeted at automotive, embedded and robotics applications which will certainly boost its sales in the coming years.

Last, its strategic move into the mobile and tablet segment has created in-depth opportunities for the company with these electronic gadgets on pick at this time, which will certainly leverage its top and bottom line as its Tesla processor business registered stunning growth of 35% year-on-year, fueled by strong volume growth in mobile and auto infotainment systems.

Also, the company strategically invested in Tegra mobile that helped the company to increase its mobile sales by 60% year-on-year, led by strong growth in smartphone SOCs and the auto business. The Tegra processor segment grew 6%, reflecting its third quarter of sequential growth.

Conclusion

Both NVIDIA and Broadcom are making really impressive moves in the market. Both stocks can rise rapidly going forward. Investors should consider an investment in the two to benefit from growth in technology.

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