Broadcom earnings may produce shock and awe

Broadcom earnings may produce shock and awe originally appeared on TheStreet.

It would be easy to write off Broadcom's year-to-date stock performance as a “so what?”

Don't. Broadcom (AVGO) shares have been flying in the aftermath of stocks' tumbling in the wake of President Trump's tariff announcement.

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True, the tech giant's year-to-date return is not impressive, up just 4.4%. But that's due to gyrating markets.

Since the end of the first quarter, however, Broadcom has jumped 44.6%, closing Friday at $242.07. That's just 3.9% below its December peak of $251.88.

Broadcom will command the most attention of companies reporting quarterly earnings this week. It's a smallish list of stocks overall because the first-quarter earnings season is largely finished.

The list includes cybersecurity company CrowdStrike Holdings (CRWD) , apparel retailer lululemon athletica (LULU) and video-game retailer GameStop (GME) .

Nvidia (NVDA) and Costco Wholesale (COST) were last week's glamour stocks and largely delivered what Wall Street wanted. And the stocks were mostly rewarded.

Nvidia was up 2.9% for the week. While the shares are up just 0,6% for 2025, they are up nearly 25% in the quarter as stock market has recovered from the tariff shock. Costco ended the week up 3.1% and is up 13.5% on the year.

A trader working at the New York Stock Exchange on Friday.ANGELA WEISS/Getty Images

The major averages all ended the week higher.

The Standard & Poor's 500 Index climbed 1.8%.
The Nasdaq Composite and Nasdaq-100 indexes were rose 2%.
The Dow Jones Industrial Average added 1.6%.

The S&P 500 ended May with a 6.2% gain, its best month of the year and the best month for the index since November 2023. It is also the S&P 500's best May performance since 1997.

The Dow industrials were up 3.9% for May. The tech-heavy Nasdaq-100 added 10.7%. The broader Nasdaq gained 9.6% for the month,

Broadcom is expected to tell a pretty good story with its fiscal second-quarter results, due after Thursday's market close. The company makes chips and infrastructure products that are key components used in artificial intelligence.

Its core customers include the hyperscalers — Microsoft (MSFT) , Alphabet (GOOGL) , Amazon.com (AMZN) and Facebook parent Meta Platforms (META) . It's been supplying the 5G radio components for the Apple (AAPL) iPhone.

These companies are spending billions of dollars building up their artificial intelligence capacities with software and giant data centers all over the world.

Wall Street estimates Broadcom will earn $1.57 a share, up 15% from a year ago. The revenue estimate is $14.97 billion, up from $12.49 billion a year ago. The company has been beating estimates for multiple quarters.

The company saw first-quarter revenue from its AI-related business hit $4 billion, up 77% from a year earlier, and it has forecast huge revenue gains in future quarters, all thanks to AI.

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Broadcom was up 5.8% for the week, outperforming the major averages.

Since the April market bottom, the shares have handily out-performed every stock in among the Magnificent 7 group stocks.

Even Tesla (TSLA) — up 33%. It's ahead of crypto dealer Coinbase Global (COIN) (up 43.2%). Broadcom's market cap is $1.14 trillion, larger than Tesla's $1.12 trillion and the $1.09 trillion market cap for Berkshire Hathaway (BRK.A) and (BRK.B) .

In the last 30 trading days, Broadcom has been the ninth-best performer in the Standard & Poor's 500 Index and eighth among stocks in the Nasdaq-100 Index.

Yes, the current situation is great and looks strong, but there may some risks to the Broadcom story.

The stock may be pricey. Its forward price/earnings ratio was 30.93 on Friday, higher than most semiconductor companies including Nvidia. Its current p/e was nearly 117. Its relative strength index was at 75. Above 75 suggests the stock is overbought and vulnerable to a shock.
Broadcom has $66 billion in long-term debt.
It has toyed with the idea of buying (INTC) , which would be a challenge if it can't sell Intel's foundry business.

2025 has been a gut-wrenching year, as everyone knows, especially President Trump who saw the S&P 500 fell 10.5% in the two days after April 2, aka Liberation Day, when he announced his tariff proposals.

Markets Friday were barely changed. So are markets in 2025. The Dow is barely positive. The S&P 500 is off 0.6%, and the Nasdaq is off 1%. The small-cap Russell 2000 index is down 7.4%.

The short answer: Ask President Trump.

He's already has accused China of violating a tariff pause agreed to earlier this month in Switzerland. (Huge tariffs are suspended on expectation for a trade deal on July 9.)
At a rally in Pittsburgh Friday, he vowed plans to impose 50% tariffs on steel imports.
His administration is scrambling to fight off a court decision that declared most of his tariff plan unconstitutional. That fight is likely to land before the Supreme Court.

The first hint of where investors see the market and global economy headed this coming week will come Sunday when futures trading opens at 6 p.m. ET.

Technology company Credo Technology Group (CRDO) , after Monday's close.
Soup maker Campbell Company (CPB) , before Monday's open.
Crowdstrike Holdings (CRWD) , after Tuesday's close.
Retailer Dollar General (DG) , before Tuesday's open.
Retailer Dollar Tree (DLTR) , before Wednesday's open.
Database company MongoDB (MDB) , after Wednesday's close.
Retailer lululemon athletica (LULU) , after Thursday's close.
Software company DocuSign (DOCU) , after Thursday's close.
Alcoholic beverage company Brown-Forman (BF.A) and (BF.B) , before Thursday's open.
GameStop (GME) , before Friday's open.