Broadcom’s Solid Forecast Fails to Give Chip Stocks a Boost
Shares of Nvidia, Micron and Intel are slipping even after fellow chip maker Broadcom said it expected 'solid demand' to continue in its fiscal fourth quarter.
Semiconductor stocks were slipping Friday even after chip maker Broadcom said it expected “solid demand” to continue in its fiscal fourth quarter. Chief Executive Hock Tan told analysts that “infrastructure spending is still very much holding.”
Broadcom (ticker: AVGO) shares rose 1.9% in premarket trading Friday to $501.50 after the company said it expected fourth-quarter revenue of $8.9 billion, higher than analysts’ expectations of $8.77 billion. The stock has declined 26% this year.
Third-quarter earnings and revenue at the chip supplier also beat Wall Street forecasts.
Tan told analysts on a conference call following the release of the earnings report that “while consumer IT hardware spending has been reported to be weak, very weak, from our vantage point, infrastructure spend is still very much holding.”
The CEO added that it was “true demand what we’re seeing with respect to the various end markets and the infrastructure products we sell to into those end markets.” He admitted the company’s earnings report was “somewhat surreal.”
Piper Sandler analyst Harsh Kumar, who rates Broadcom stock at Overweight, said the company “reported a very stable and solid quarter,” adding that the company saw growth “across the software business and, more importantly, across the semiconductor business as well.”
Shares of chip stocks have stumbled this year as demand has waned for consumer products such as personal computers and smartphones.
Nvidia (NVDA) shares fell slightly Friday after tumbling 7.7% in Thursday’s session. The decline Thursday was related to new licensing requirements from the U.S. on some of the company’s advanced chips, which will impact sales to China. The stock has declined nearly 53% this amid the weaker demand environment.
Chip makers Micron Technology (MU), Intel (INTC) and Qualcomm (QCOM) also were posting modest losses in premarket trading. They had traded higher earlier in the session. Advanced Micro Devices (AMD) was rising, but only slightly with the stock barely in positive territory.
Write to Joe Woelfel at joseph.woelfel@barrons.com