Core Insights - Broadcom Inc. experienced its largest stock decline in over 10 months, with an 11% drop in New York trading, following a disappointing sales outlook for the AI market [1][2] - CEO Hock Tan mentioned a backlog of $73 billion in AI product orders to be shipped over the next six quarters, but this figure did not meet investor expectations [2][4] - The company refrained from providing a specific annual AI revenue forecast, citing the uncertainty of future orders and narrowing profit margins [4] Company Performance - Broadcom's stock fell 11% after the conference call, marking the biggest single-day drop since late January [2] - The company reported expected sales of approximately $19.1 billion for the fiscal first quarter, surpassing analysts' average estimate of $18.5 billion [4] - Broadcom increased its quarterly dividend by 10% to 65 cents per share [4] Market Context - The disappointing outlook from Broadcom followed a similar report from Oracle Corp., which also faced investor concerns regarding AI prospects due to increased spending on data centers [3] - Oracle's stock also fell 11% after pushing back completion dates for data centers being developed for OpenAI [3]

Are you worried. These drip, drip bits of information that maybe the revenue streams on able to be booked tomorrow. It has to be wait it out a little bit more in terms of the returns on investment.No, I think the long term trends are still in place. I actually thought that Broadcom's numbers were quite good and people were just, I think, very nervous at the end of the year, particularly with some bad news we've seen, such as from Oracle. And and I think it's really more just end of year jitters rather than ...

You have different sets of data. They gave us a figure, which was a $73 billion backlog. Yep.This morning, quite clearly the market would like to see a revenue number. That's forward looking. Yep. Yep, that's true.So. So you're right. I think the I think what's interesting here, the reason why Broadcom is down is not about the it's not about how revenue has perhaps missed expectations.First and foremost um the company actually beaten raised guidance AI sales were above expectations. The outlook for next qua ...

Core Insights - The market reaction to Broadcom's recent performance is primarily driven by concerns over revenue expectations rather than actual sales figures, which include a significant backlog of $73 billion [1] - Broadcom's AI sales exceeded expectations, with a forecast for the next quarter of $8.2 billion, significantly higher than the consensus of $6.8 billion, indicating strong year-over-year growth [2] - Concerns regarding the margin structure of the anthropic deal, which involves $21 billion of sales, are contributing to investor apprehension, as the TPU system sale is expected to have lower margins compared to previous sales [3] Company Positioning - Broadcom is positioned as a leader in infrastructure spending, particularly in networking and compute, similar to Nvidia, controlling two of the three main segments [4] - The company is moving towards a full solution stack for AI, which includes both compute and networking capabilities, a strategy that is being overlooked by some investors during the current sell-off [5] - Broadcom's offerings in the full solution stack across networking and compute are unique in the tech industry, making it one of the few companies with such capabilities [8] Market Dynamics - The competitive landscape indicates that Broadcom's success does not necessarily come at the expense of other companies, as hyperscalers are adopting a mix of custom compute and GPUs for model training [7] - Supply chain challenges are evident, with companies like Dell increasing prices due to memory costs and Oracle facing delays in data center deployments, indicating a tight infrastructure market [9] - The overall visibility across the supply chain is improving, with companies like Broadcom and Nvidia benefiting from long-term demand projections, despite current tightness in certain areas like optical transceiver components [11][12]

Core Insights - Broadcom's stock is experiencing a significant decline despite strong sales and earnings performance, with a drop of 11.7% in a single trading session [1][6] - The company reported fourth-quarter results that exceeded Wall Street expectations, but negative investor sentiment is growing due to concerns over other performance indicators [2][4] Financial Performance - In the fourth quarter, Broadcom achieved non-GAAP earnings per share of $1.95 on revenue of $18.02 billion, surpassing analyst estimates of $1.89 per share on revenue of $17.46 billion [4] - Revenue for the quarter surged approximately 28% year-over-year, driven by robust demand for AI infrastructure products, with AI category revenue increasing by 65% to reach $20 billion [5] Future Guidance - For the current quarter, Broadcom provided a sales guidance of $19.1 billion, which is above the average analyst estimate of $18.31 billion [7] - Despite the positive sales outlook, concerns have arisen regarding potential margin pressure, with management anticipating a gross margin decline of about 100 basis points sequentially, attributed to a higher mix of AI revenue [8]

Company Overview - Broadcom (NASDAQ:AVGO) is a significant player in the semiconductor industry, offering a diverse range of products including chips for data centers, networking, and broadband [1] - The company's market capitalization is approximately $1.91 trillion, with a trading volume of 26.64 million shares on the NASDAQ exchange [5][6] Stock Performance - Following its earnings report, Broadcom's stock experienced a decline, currently priced at $406.96, reflecting a decrease of 1.46% or $6.01 [4] - During the trading day, the stock reached a low of $394.19 and a high of $408.53, with a yearly high of $414.61 and a low of $138.10 [4] Analyst Ratings - Benchmark upgraded Broadcom's stock to "Buy," setting a new price target of $485, up from $385 [1][6] Market Trends - The semiconductor sector is currently experiencing mixed trends, with Nvidia in a consolidation phase, Intel finding support during pullbacks, and AMD stabilizing despite cautious guidance on AI [2] - Broadcom's recent concerns have influenced these market dynamics, suggesting that buying on dips could be a favorable strategy [2] Competitive Landscape - Broadcom is cautious about the potential dominance of Google's Tensor Processing Units (TPUs) in the AI chip market, tempering expectations regarding Google's AI chips becoming the leading force [3][6] - This cautious stance comes amid increasing competition from companies like NVIDIA [3]

Yes. >> Will this continue into next year. Tim Seymour is the CIO of Seymour Asset Management and a CNBC contributor.>> Hey, Kelly. >> So, thank goodness AI came along when it did because the market in 2022 didn't look so hot. Thank goodness the rest of the market is now feeling better as the AI trade stumbles.Can it be that easy. Well, I think the other 493 are not only reaping some of the benefits of AI, but I think you have a dynamic here where you definitely are seeing EPS growth. You are seeing margin ...

Jay Goldberg is joining us from Seapport Global Securities. Jay, what's the story with Broadcom as far as you're concerned. >> I think uh this is a case of the super intelligent AI god gives and and then takes away.Uh there's a lot of all these stocks are sort of wrapped up in the broader AI trade uh where there's not a lot of room for error. Uh and I think if you look at Broadcom just their their numbers were really good. Quarter was good, outlook was good.Uh the problem is they're just they weren't good e ...

Jay Goldberg is joining us from Seapport Global Securities. Jay, what's the story with Broadcom as far as you're concerned. >> I think uh this is a case of the super intelligent AI god gives and and then takes away.Uh there's a lot of all these stocks are sort of wrapped up in the broader AI trade uh where there's not a lot of room for error. Uh and I think if you look at Broadcom just their their numbers were really good. Quarter was good, outlook was good.Uh the problem is they're just they weren't good e ...

Core Viewpoint - Broadcom's recent earnings report initially appeared strong, surpassing expectations, but subsequent reactions indicated concerns about shipment delays and a larger-than-expected backlog, leading to a decline in margins for the next quarter [2][3][6] Financial Performance - Broadcom's earnings report showed good demand and exceeded numbers, but the market reaction was negative due to concerns about not significantly exceeding expectations, particularly in the AI sector [2][4][5] - The company anticipates AI demand to accelerate next year, potentially doubling in growth the following year, with existing customers like Google and new customers like Anthropic contributing to this growth [6][12] Market Reaction - The selloff in Broadcom's stock is viewed as unjustified by analysts, who believe it overlooks the broader positive outlook for AI [7][8] - Concerns in the market stem from fears that the rollout of AI technologies and the necessary infrastructure, such as data centers, may not happen as quickly as anticipated [9][10] Customer Orders and Future Outlook - Broadcom has secured significant purchase orders, including a $10 billion order from Anthropic and an additional $11 billion order announced recently, indicating strong future growth potential [11][12] - The company has also announced a 10-gigawatt deal with OpenAI for capacity over three years, although analysts express skepticism about the feasibility of rapid data center buildouts due to supply and power constraints [13][14]