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News

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Broadcom’s stock jumps on profit beat, stock split

Friday, June 14, 2024

Today’s headlines

What’s happening: Shares of Broadcom surged on Thursday, after the company released its fiscal second-quarter results.

What happened: The chipmaker reported better-than-expected sales and earnings for the latest quarter.

Broadcom raised its revenue guidance for fiscal 2024 and announced a stock split.

How were the results: The Palo Alto, California-based company has now topped earnings expectations in 16 straight quarters.

  • Sales surged around 43% year-over-year to $12.487 billion, which exceeded consensus estimates of $12.028 billion.
  • Earnings came in at $10.96 per share, topping Wall Street expectations of $10.84 per share.

Why it matters: Continued high adoption of GenAI has boosted demand for the chips used in powering these intensive applications, benefitting tech firms like Broadcom.

The company reported $3.1 billion in revenues from AI products in the latest quarter, while revenues from its semiconductor solutions segment gained around 6% to $7.20 billion. Revenues from the infrastructure software unit more than doubled in the quarter.

The company generated $4.58 billion in cash from operations, while closing the quarter with cash and cash equivalents of $9.809 billion.

“Broadcom’s second quarter results were once again driven by AI demand and VMware,” CEO Hock Tan said.

The company’s board declared a quarterly dividend of $5.25 per share and approved a 10-for-1 forward stock split. The company’s stock is likely to start trading on a split-adjusted basis on July 15.

Management raised their revenue guidance for fiscal 2024 by $1 billion to $51 billion. They projected revenues from AI-linked chips of $11 billion in the year, compared to the previous outlook of $10 billion. The company also expects adjusted EBITDA to be around 61% of projected revenues.

More than 15 analysts boosted their price targets on the stock after the results were announced.

How shares responded: Broadcom’s shares jumped 12.3% to close at $1,678.99 on Thursday following the release of quarterly results. The stock has surged around 55% year to date.

What to watch: Investors will continue monitoring the growing adoption of GenAI and the resulting demand for AI chips.

The markets today

The Canadian dollar will be in focus ahead of a basket of major economic reports

Context: The CAD/USD forex pair moved lower on Thursday amid a surge in the US dollar.

Details: The CAD/USD pair came under pressure on Thursday with the greenback recording sharp gains after the US Federal Reserve kept interest rate unchanged at its latest meeting, while pushing out the start of rate cuts.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.5% to 105.20 on Thursday, after hitting a four-week high of 105.46 on Tuesday.

Meanwhile, last week, the Bank of Canada became the first G7 central bank to lower rates. The central bank also reiterated that it could lower interest rates further. Traders widely expect the BoC to cut rates at the next policy meeting on July 24.

Some strength in the price of crude oil, one of Canada’s major exports, limited the overall losses for the loonie. WTI crude oil for July delivery gained 12 cents to settle at $78.62 per barrel on Thursday.

The CAD/USD forex pair fell around 0.3% to 1.3743 on Thursday. The S&P/TSX Composite Index dipped 1.2% to close at 21,698.11.

What to watch: Investors await the release of economic data on manufacturing sales, new motor vehicle sales and wholesale sales from Canada today. Analysts expect Canada’s manufacturing sales to grow by 1.2% in April, compared to a 2.1% decline in the prior month.

Car registrations in Canada, which rose to 172,104 units in March, are expected to increase further to 180,000 units in April. Wholesale sales in Canada are expected to surge by 2.8% in April, following a 1.1% decline in March.

Other Markets: European indices closed lower on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.63%, 1.96%, 1.99% and 1.31%, respectively.

The news shaping the markets

Italian Prime Minister Giorgia Meloni said that G7 nations had agreed to provide financial support worth $50 billion to Ukraine in its war with Russia. The news sent the safe-haven US dollar index higher in forex trading this morning.


New Zealand’s BusinessNZ performance of manufacturing index fell to 47.2 in May, from 48.9 in April. The region’s factory activity contracting for the 14th straight month exerted pressure on the NZD/USD forex pair.


South Korea’s import prices increased by 4.6% year-over-year in May, compared to a 2.9% gain in the prior month. The recent surge in prices being the highest since December 2022 sent the GBP/USD pair lower in forex trading this morning.


Argentina’s consumer prices increased by 4.2% in May, easing from the 8.8% rise in the previous month, which lent support to the ARS/USD forex pair.


Russia’s trade surplus widened to $10.66 billion in April, from $6.77 billion in the year-ago month, which sent the RUB/USD pair higher in forex trading this morning.

What else to watch today

India’s wholesale prices, foreign exchange reserves and balance of trade, France’s inflation rate, Italy’s balance of trade, Eurozone’s balance of trade, Brazil’s IBC-Br economic activity index and industrial entrepreneur confidence index, US export prices, import prices, University of Michigan consumer sentiment, Baker Hughes crude oil rigs and Baker Hughes total rigs, Russia’s consumer price index and GDP growth rate, China’s vehicle sales, new yuan loans, money supply M2, value of outstanding loans and total social financing, as well as Turkey’s government budget balance.


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