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Broadcom's Stock May Drop Sharply Following Results

Broadcom's Q3 earnings forecast shows a 15% year-over-year EPS increase and 46% year-over-year revenue growth, driven mainly by its infrastructure software segment.The software segment, bolstered by V

Broadcom's Stock May Drop Sharply Following Results

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{"i18n":{"language":"en_US"},"data":{"magic":2,"id":345806160150816,"tweetId":"345806160150816","gmtCreate":1725430725198,"gmtModify":1725430728876,"author":{"id":3574807189087941,"idStr":"3574807189087941","authorId":3574807189087941,"authorIdStr":"3574807189087941","name":"Icywinddale","avatar":"https://static.itradeup.com/news/3bd2fbf9d90e26b2f600b2c5d7c54244","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":0,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"html":"<html><head></head><body><p>may drop? &nbsp;Why we need waste time to read this article? <span>[Weak]&nbsp;</span> <span>[Weak]&nbsp;</span>&nbsp;</p></body></html>","htmlText":"<html><head></head><body><p>may drop? &nbsp;Why we need waste time to read this article? <span>[Weak]&nbsp;</span> <span>[Weak]&nbsp;</span>&nbsp;</p></body></html>","text":"may drop? Why we need waste time to read this article? [Weak] [Weak]","highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/345806160150816","repostId":2464351176,"repostType":2,"repost":{"id":"2464351176","pubTimestamp":1725428700,"share":"https://www.laohu8.com/m/news/2464351176?lang=&edition=full","pubTime":"2024-09-04 13:45","market":"us","language":"en","title":"Broadcom's Stock May Drop Sharply Following Results","url":"https://stock-news.laohu8.com/highlight/detail?id=2464351176","media":"Seeking Alpha","summary":"Broadcom's Q3 earnings forecast shows a 15% year-over-year EPS increase and 46% year-over-year revenue growth, driven mainly by its infrastructure software segment.The software segment, bolstered by V","content":"<html><head></head><body><ul style=\"\"><li><p>Broadcom&#39;s Q3 earnings forecast shows a 15% year-over-year EPS increase and 46% year-over-year revenue growth, driven mainly by its infrastructure software segment.</p></li><li><p>The software segment, bolstered by VMware, is expected to double sales to $5.5 billion, overshadowing modest growth in semiconductor and AI segments.</p></li><li><p>Despite impressive growth, Broadcom&#39;s valuation is high at 26 times earnings, raising concerns about the sustainability of its premium valuation.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/8c91587eababb5a90a14f1f8183f7b1a\" alt=\"JHVEPhoto\" title=\"JHVEPhoto\" tg-width=\"750\" tg-height=\"500\"/><span>JHVEPhoto</span></p><p>Broadcom (NASDAQ:AVGO) will report its fiscal third quarter earnings after the market closes on Sept. 5. Analysts are forecasting a 15% y/y increase in earnings per share to $1.22, alongside a significant 46% y/y growth in revenue, bringing the total to approximately $13 billion. However, it’s important to note that the growth in Broadcom’s Semiconductor Solutions segment is expected to be relatively modest, with an anticipated increase of just 7% y/y, reaching $7.4 billion. The company’s AI segment is projected to see only a slight uptick, growing by 5% q/q to $3.3 billion.</p><h2 id=\"id_648776196\">AI or Not AI</h2><p>In contrast, Broadcom’s infrastructure software segment drives much of the company’s overall growth. This unit is expected to see its sales more than double, reaching $5.5 billion, with VMware contributing $3.3 billion. This shift highlights Broadcom’s growth, which is increasingly coming from its software side, mainly through acquiring VMware, rather than from its traditional semiconductor business. This dynamic may surprise those who view Broadcom primarily as an AI-driven company, which makes up a relatively small amount of total revenue.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/52d0e70018b4ded1cf805bd0e748e128\" alt=\"Bloomberg\" title=\"Bloomberg\" tg-width=\"640\" tg-height=\"251\"/><span>Bloomberg</span></p><p>Despite the company’s impressive growth figures, Broadcom no longer provides quarterly guidance, having shifted to offering only annual forecasts. For the current year, the company is targeting $51 billion in revenue, a figure that was reiterated last quarter. Analysts expect it to slightly exceed that at $51.7 billion.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/6d5d225a519e5b40485093100af19f89\" alt=\"Bloomberg\" title=\"Bloomberg\" tg-width=\"640\" tg-height=\"251\"/><span>Bloomberg</span></p><h2 id=\"id_4278677996\">No Surprises</h2><p>Broadcom has a history of reporting in line with revenue estimates, with last quarter marking its most significant beat in recent times at 3.5%. Regarding adjusted earnings, the company also tends to beat expectations by a small margin, typically around 1%. Market expectations for Broadcom’s stock movement post earnings are modest, with a projected move of around 6.7%.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/9f1a78a94a703a65991bac4cf430ef68\" alt=\"Bloomberg\" title=\"Bloomberg\" tg-width=\"640\" tg-height=\"339\"/><span>Bloomberg</span></p><h2 id=\"id_3511479312\">Options Betting on Further Upside</h2><p>Looking at options positioning for the week of Sept. 6, implied volatility [IV] is relatively modest at 77%, though it should continue to rise heading into the earnings release as event risk builds. The options market is very bullish on Broadcom, as noted by the solid positive call gamma and delta values, particularly around the $160 strike price, with resistance at $170 and support near $150.</p><p>It&#39;s important to note that once the event risk passes, the implied volatility will drop, and both the calls and the puts will see their premiums fall dramatically. As of Sept. 3, a buyer of the $160 calls needs the stock to rise above $166 following the results, or the options will lose value by 6.5%. This is similar to what happened with Nvidia, and if the stock cannot clear $160, option holders could sell their positions. That may be hard to do, considering the implied move being priced in by the market is just 6.75%, as already noted.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/13056874964d6a821c5d80a23dd8cfae\" alt=\"Bloomberg\" title=\"Bloomberg\" tg-width=\"640\" tg-height=\"251\"/><span>Bloomberg</span></p><h2 id=\"id_623294998\">Already At Support</h2><p>From a technical perspective, Broadcom’s stock is currently trading around $155, a level that had previously served as support. The $170 area appears to be a key resistance point, while the $136 region has recently been a support zone.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/c37dc34a2c29767ce2b7f2bbae4a8beb\" alt=\"TradingView\" title=\"TradingView\" tg-width=\"640\" tg-height=\"291\"/><span>TradingView</span></p><h2 id=\"id_3577052737\">Not Cheap</h2><p>Valuation wise, Broadcom is trading at 26 times earnings, significantly higher than its historical average of around 13 to 14 times. On a price-to-sales basis, the stock is currently valued at 12 to 13 times sales, well above historical norms. This elevated valuation suggests that much of the optimism around Broadcom is tied to its AI prospects, despite the bulk of its growth coming from the VMware acquisition.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/8df38f6c2538ff1c591f7436fa2c929a\" alt=\"Bloomberg\" title=\"Bloomberg\" tg-width=\"640\" tg-height=\"288\"/><span>Bloomberg</span></p><p>While Broadcom’s AI business is expected to contribute significantly to its revenue in the coming years, its current valuation appears stretched, particularly when compared to its historical trends. Investors seem to be betting on further upside, but the steep valuation raises questions about whether Broadcom can continue to justify its premium valuation.</p><p>Additionally, the big risk here is that Broadcom does what it normally does when it reports results, delivering as expected. If that should happen, the overly bullish options market is likely to bring a lot of stock for sale, pushing shares lower, and making the call options a losing bet.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Broadcom's Stock May Drop Sharply Following Results</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBroadcom's Stock May Drop Sharply Following Results\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-04 13:45 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4718714-broadcom-stock-may-drop-sharply-following-results><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Broadcom's Q3 earnings forecast shows a 15% year-over-year EPS increase and 46% year-over-year revenue growth, driven mainly by its infrastructure software segment.The software segment, bolstered by ...</p>\n\n<a href=\"https://seekingalpha.com/article/4718714-broadcom-stock-may-drop-sharply-following-results\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","IE00BLSP4452.SGD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis SGD-H Plus","BK4588":"碎股","BK4141":"半导体产品","IE00BZ9MQY76.HKD":"FTGF CLEARBRIDGE US AGGRESSIVE GROWTH \"A\" (HKD) ACC","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","LU0203345920.USD":"SCHRODER ISF QEP GLB ACT. 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Analysts are forecasting a 15% y/y increase in earnings per share to $1.22, alongside a significant 46% y/y growth in revenue, bringing the total to approximately $13 billion. However, it’s important to note that the growth in Broadcom’s Semiconductor Solutions segment is expected to be relatively modest, with an anticipated increase of just 7% y/y, reaching $7.4 billion. The company’s AI segment is projected to see only a slight uptick, growing by 5% q/q to $3.3 billion.AI or Not AIIn contrast, Broadcom’s infrastructure software segment drives much of the company’s overall growth. This unit is expected to see its sales more than double, reaching $5.5 billion, with VMware contributing $3.3 billion. This shift highlights Broadcom’s growth, which is increasingly coming from its software side, mainly through acquiring VMware, rather than from its traditional semiconductor business. This dynamic may surprise those who view Broadcom primarily as an AI-driven company, which makes up a relatively small amount of total revenue.BloombergDespite the company’s impressive growth figures, Broadcom no longer provides quarterly guidance, having shifted to offering only annual forecasts. For the current year, the company is targeting $51 billion in revenue, a figure that was reiterated last quarter. Analysts expect it to slightly exceed that at $51.7 billion.BloombergNo SurprisesBroadcom has a history of reporting in line with revenue estimates, with last quarter marking its most significant beat in recent times at 3.5%. Regarding adjusted earnings, the company also tends to beat expectations by a small margin, typically around 1%. Market expectations for Broadcom’s stock movement post earnings are modest, with a projected move of around 6.7%.BloombergOptions Betting on Further UpsideLooking at options positioning for the week of Sept. 6, implied volatility [IV] is relatively modest at 77%, though it should continue to rise heading into the earnings release as event risk builds. The options market is very bullish on Broadcom, as noted by the solid positive call gamma and delta values, particularly around the $160 strike price, with resistance at $170 and support near $150.It's important to note that once the event risk passes, the implied volatility will drop, and both the calls and the puts will see their premiums fall dramatically. As of Sept. 3, a buyer of the $160 calls needs the stock to rise above $166 following the results, or the options will lose value by 6.5%. This is similar to what happened with Nvidia, and if the stock cannot clear $160, option holders could sell their positions. That may be hard to do, considering the implied move being priced in by the market is just 6.75%, as already noted.BloombergAlready At SupportFrom a technical perspective, Broadcom’s stock is currently trading around $155, a level that had previously served as support. The $170 area appears to be a key resistance point, while the $136 region has recently been a support zone.TradingViewNot CheapValuation wise, Broadcom is trading at 26 times earnings, significantly higher than its historical average of around 13 to 14 times. On a price-to-sales basis, the stock is currently valued at 12 to 13 times sales, well above historical norms. This elevated valuation suggests that much of the optimism around Broadcom is tied to its AI prospects, despite the bulk of its growth coming from the VMware acquisition.BloombergWhile Broadcom’s AI business is expected to contribute significantly to its revenue in the coming years, its current valuation appears stretched, particularly when compared to its historical trends. Investors seem to be betting on further upside, but the steep valuation raises questions about whether Broadcom can continue to justify its premium valuation.Additionally, the big risk here is that Broadcom does what it normally does when it reports results, delivering as expected. If that should happen, the overly bullish options market is likely to bring a lot of stock for sale, pushing shares lower, and making the call options a losing bet.","news_type":1},"isVote":1,"tweetType":1,"viewCount":145,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":56,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}