To The Moon

Broadcom stock is jumping after the company reported stronger-than-expected earnings—and that could be good news for shares of Nvidia and other chip companies.

After Thursday’s close, Broadcom reported a profit of $8.39 per share, beating forecasts for $8.23, on sales of $7.7 billion, edging out predictions for $7.5 billion. Broadcom also raised its second-quarter guidance to $7.9 billion, ahead of the consensus for $7.4 billion. Broadcom stock has gained 2.5% to $593.27 at 10:01 a.m.

“Overall, we continue to like the Broadcom story and believe its lower-valuation, strong shareholder return program, and solid FCF/margin profile makes it a solid defensive name in the volatile broader market,” writes Piper Sandler analyst Harsh Kumar.

Broadcom’s earnings could also be good news for other chip makers, including Nvidia, according to Truist analyst William Stein. While he believes that “the semi industry is in the back-half of the cycle, with y/y growth having faded for the last two quarters after having peaked in 2Q2,” he sees signs of acceleration during Broadcom’s numbers. “We take this as yet another positive read on semis overall,” he writes, while noting that his favorite stocks include Nvidia (NVDA), Monolithic Power Systems (MPWR), Diodes (DIOD), and NXP Semiconductors (NXPI), among others.

The market isn’t making that leap Friday morning, however. While Broadcom stock is gaining, most chip stocks are falling with the overall market. Nvidia stock has fallen 1.1% in premarket trading, while Monolithic has dropped 1.9%, NXP has slipped 2.1%, and Diodes has declined 1.8%.

Even with Broadcom’s gain, the iShares Semiconductor ETF (SOXX) has declined 0.9%, while the S&P 500 has dropped 1%, and the Dow Jones Industrial Average has fallen 328.21 points, or 1%.