Baron Fund, an investment management company, released its Q4 2025 letter for “Baron Durable Advantage Fund”. A copy of the letter can be downloaded here. The Fund returned 2.6% in the fourth quarter, which mirrored the S&P 500 Index’s 2.7% return. The Fund returned 16.6% in 2025, compared to 17.9% for the Index and 16.1% gain for the Peer Group, Morningstar Large Growth Category average. Moving to 2026, in an environment dominated by geopolitics, changing regulatory trends, and artificial intelligence, the Fund focuses on investing in high-quality, large-cap companies with solid competitive advantages, proven track record, and consistent shareholder returns. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Baron Durable Advantage Fund highlighted Broadcom Inc. (NASDAQ:AVGO) as a notable contributor. Broadcom Inc. (NASDAQ:AVGO)is a leading semiconductor and infrastructure software solutions company. On February 10, 2026, Broadcom Inc. (NASDAQ:AVGO) stock closed at $340.44 per share. One-month return of Broadcom Inc. (NASDAQ:AVGO) was 0.16%, and its shares are up 44.04% over the past twelve months. Broadcom Inc. (NASDAQ:AVGO) has a market capitalization of $1.614 trillion.
Baron Durable Advantage Fund stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its fourth quarter 2025 investor letter:
“Broadcom Inc. (NASDAQ:AVGO) is a leading fabless semiconductor and enterprise software company, generating approximately 60% of revenue from semiconductors and 40% from software. The company is strategically positioned at the intersection of high-performance AI compute and networking infrastructure, while also demonstrating disciplined execution in software. Broadcom has extended its leadership in merchant networking silicon from the cloud era into the AI era and is regarded as the most reliable silicon partner for AI foundational model builders designing custom chips to train frontier models. Shares rose 5.0% in the fourth quarter, ending 2025 up 50.6%, driven by strong momentum in AI, with key customer Google continuing to ramp and additional large customers entering significant volume production. The company ended its fiscal 2025 with AI revenue growth of 65%, which reached $20 billion (nearly one-third of total revenues), with quarterly AI revenues up 10x in the last 11 quarters. Broadcom also announced overall AI backlog of $73 billion, which is almost half of the company’s total backlog of $162 billion. It now has 5 XPU (AI accelerator) customers, including Anthropic which was announced in the last quarter. Despite the robust growth, Broadcom guided AI revenues to further accelerate in fiscal year 2026. In addition, VMware integration progresses and the non-AI semiconductor businesses appear to be bottoming, which has driven overall company growth to 24% in fiscal year 2025 with 67% EBITDA margins. We believe that Broadcom’s growth runway is long as an enabler of a full-stack solution as demand is expected to remain durable for years to come underpinned by the AI infrastructure build-out.”
