276.14 +2.15 (0.78%)
Pre-Market: 7:45AM EDT
|Bid||270.00 x 800|
|Ask||290.61 x 800|
|Day's Range||273.96 - 281.00|
|52 Week Range||197.46 - 323.20|
|Beta (3Y Monthly)||0.64|
|PE Ratio (TTM)||36.57|
|Earnings Date||Sep 4, 2019 - Sep 9, 2019|
|Forward Dividend & Yield||10.60 (3.80%)|
|1y Target Est||316.61|
Escalating the China trade war could deal a serious blow to the slowing U.S. economy. President Trump will meet with Chinese President Xi Jinping this week.
US President Donald Trump is reportedly considering imposing a requirement that 5G equipment used in the United States must be manufactured outside China. Just last month, Trump barred Huawei from doing business with US companies without prior approval.
Broadcom’s (AVGO) stock fell 5.6% a day after it released its fiscal 2019 second-quarter earnings in which it cut its full-year fiscal 2019 revenue guidance by 7%, or $2 billion.
radio-frequency (RF) chip business has been gradually gaining steam, thanks in part to a strong 5G position. Last summer, Qualcomm unveiled a pair of 5G RF module families -- one for more conventional, sub-6Ghz, spectrum bands, and another for high-frequency, millimeter-wave (mmWave) bands that have limited range but can support very high upload and download speeds. The company followed that up in February of this year by unveiling -- along with a second-gen 5G modem known as the Snapdragon X55 -- a second-gen, mmWave, antenna module and a slew of new RF products for sub-6GHz bands.
The US-China trade war accelerated in May as the two countries hiked tariff rates and the US banned firms from doing business with Huawei, one of the biggest customers of the tech industry. In May, the WSTS lowered its November 2018 estimate of a 3% YoY decline in global semiconductor revenue in 2019 to 12%.
Fiscal 2019 has been an interesting year for Broadcom (AVGO). Its revenue has fallen due to weak demand in the wireless communications market, but its profit margins have risen due to declining costs. While Broadcom is succeeding in improving its margins, profit is falling in dollar terms because of declining revenue.
The United States restricted Huawei Technologies from buying U.S. goods in May, saying the firm's equipment could be used by Beijing for spying. IQE, which makes semiconductor wafers for chips used in Apple Inc products among others, is also suffering from a global slowdown in demand. Chief Executive Drew Nelson said IQE was operating in "unprecedented times" for the semiconductor industry.
Over the years, Broadcom (AVGO) has grown through acquisitions, which has helped it increase cash flows and profits. This strategy will help it maintain its profits even in the semiconductor downturn. However, these acquisitions also increased its leverage. At the end of the second quarter of fiscal 2019, Broadcom had $5.3 billion in cash reserves and $37.5 billion in total debt, resulting in net debt of $32.2 billion.
Support has held for Nvidia (NASDAQ:NVDA) shares again. In late May, the Nvidia stock price dipped below $135. As was the case in November, late December, and late January, NVDA stock rebounded.Source: Nvidia There has been some outside help, admittedly. Progress on the trade war with China has boosted the entire chip sector. The tech-heavy NASDAQ Composite looks like it's targeting new all-time highs. But at least for now, the market seems to have a threshold where it decides the Nvidia stock price is just too cheap.The question now is whether that support can hold again, if tested. And that comes down to the chipmaker's performance in the second half of its fiscal 2020. That starts about six weeks from now. This is a second-half story, as I've written earlier this year and as NVDA management itself has insisted.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIf management is right, the rally could keep going. I remain skeptical, given long-term risks. Plus, the short-term news of late looks mixed. NVDA Stock and the Second HalfTo be sure, it's widely known that NVDA relies on a second-half recovery. Management made that case after fiscal-fourth-quarter results. They even took the unusual step of offering full-year guidance to highlight the dichotomy between the first and second half. * 6 Stocks Ready to Bounce on a Trade Deal So far, Nvidia continues to sing the same tune. CFO Colette Kress reiterated on Q1's conference call in mid-May that "we expect a stronger second half than the first." Last week, at an investment conference, she said much the same regarding data-center demand.There are two factors at play here. First-half results last year, in the company's fiscal 2019, were enormously impressive. In retrospect, those results were driven by demand for cryptocurrency mining. In the first half of this year, Nvidia faces very difficult comparisons. It's also suffering from what the company itself has called a "crypto hangover." At the same time, data-center demand has slowed, as key customers paused spending.In the second half, however, the situation reverses. Comparisons get easier, particularly in Q4. And data-center growth -- as Kress said last week -- should return. And so the Street at least sees revenue declining 18% in Q2 and 6% in Q3 before a sharp rebound (+47%) in Q4 sets up 20% growth in fiscal 2021. The Importance of the RecoveryThe question now is whether that recovery is on the way. And it's not just a matter of NVDA earnings rebounding a quarter or two early -- or a quarter or two late.First, management's credibility is at stake. Last year, Nvidia clearly misjudged cryptocurrency demand both financially and operationally. The company didn't see the drop-off in sales coming. Unfortunately, it overproduced GPUs, leading to an inventory glut in the first half of this year. Another broken promise will make Nvidia a "show me" story for some time to come.Secondly, data-center demand in particular must come back quickly. That's an area where investors see years of double-digit growth ahead. A longer slowdown will raise fears that demand issues aren't short-term, but rather a sign that investors (and management) simply overestimated the market opportunity.And third, Nvidia has an opportunity to take share from Intel (NASDAQ:INTC) in that market. Intel is dealing with shortages and a number of other unforced errors. Its leadership team seems more cautious about second-half demand. If Nvidia sees a recovery and Intel doesn't, that's a sign that Intel's dominance in that market is eroding further. That leaves NVDA and Advanced Micro Devices (NASDAQ:AMD) likely picking up share. But Is It en Route?Is that recovery on the way? We'll see. CFO Kress' sentiment toward data center, and similar comments from another Nvidia executive regarding AI a week before, unquestionably are good news. We don't know exactly how clear is Nvidia's visibility into Q3 and Q4. However, the company hasn't backed off its forecast yet.On the other hand, chip giant Broadcom (NASDAQ:AVGO) sounded much more cautious after its fiscal Q2 report last week. The day before, Evercore (NYSE:EVR) pushed its forecast for a recovery well into 2020. As MarketWatch noted after Nvidia earnings last month, Microchip Technology (NASDAQ:MCHP) CEO Steve Sanghi "lightly walked back" his call of a bottom in chips.To be sure, Nvidia doesn't necessarily play in the same markets as those other chipmakers. It's possible NVDA could follow the bullish trajectory while the rest of the space stays stuck near the bottom of the cycle. Still, after the debacle last year, it's wise to take Nvidia management's projections with a grain of salt.With Nvidia stock still off the lows, there is a case to stay patient. After all, the recovery can come in Q4 FY2020 or Q3 FY2021. NVDA still isn't that expensive on an earnings basis, though it's not cheap by chip standards. The long-term growth drivers -- data center, artificial intelligence, autonomous driving -- are mostly in place.But AMD is rising as a real competitor. I personally still see self-driving cars as a long way off. And investor patience is likely going to wane if NVDA is overpromising again. Nvidia stock has bounced off support several times. It won't be able to do so forever.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Blue-Chip Stocks to Buy for a Noisy Market * 5 Strong Buy Biotech Stocks for the Second Half * 6 Stocks Ready to Bounce on a Trade Deal Compare Brokers The post Nvidia Stock Shows Life Ahead of a Key Second Half appeared first on InvestorPlace.
Broadcom’s (AVGO) business strategy revolves around acquiring high cash flow companies to increase its cash flows in order to return more value to shareholders. By integrating CA Technologies, Broadcom increased its operating cash flow by 15%, or $350 million, YoY to $2.67 billion in the second quarter of fiscal 2019.
The BAML survey highlighted the fact that investors are very bearish on growth expectations. A net 50% of the respondents expect global growth to weaken over the next 12 months. A record number of investors said that the global economy was in the late cycle.
Broadcom (AVGO) CEO Hock Tan is known for his expertise in growing through mergers and acquisitions. His strategy is to acquire companies that are market leaders with high cash flow and deliver strong returns to shareholders.
In Bank of America Merrill Lynch’s June 2019 survey, the trade war remained the top risk cited by 56% of the respondents. Since Trump’s tweet on May 5, trade tensions have only revived with China retaliating in kind. Time and again, Trump has also talked about bringing another $300 billion worth of Chinese imports under tariffs.
Broadcom’s (AVGO) fiscal 2019 second-quarter earnings were in the spotlight last week, as the company slashed its full-year revenue guidance due to the US-China trade war and the Huawei ban. The guidance pulled down semiconductor stocks and dampened hopes for a recovery in the second half of the year.
Broadcom (AVGO) stock gives a glimpse of the health of semiconductor stocks. It moves in tandem with the VanEck Vectors Semiconductor ETF (SMH). Semiconductor stocks rose in the first four months of 2019 over the anticipation of growth in the second half.
President and CEO of Broadcom Inc (NASDAQ:AVGO) Hock E Tan sold 20,000 shares of AVGO on 06/17/2019 at an average price of $264 a share.
After Tuesday's big rally, Wednesday's session was muted most of the day, but it wasn't boring. What moved the Nasdaq today? As is typically the case on FOMC meeting days, the Federal Reserve was on everyone's radar.Source: Shutterstock While the market was pricing in a roughly 25% chance of a rate cut this month, it was no surprise that the Fed held steady. But that doesn't mean they will continue to do so going forward. According to the Fed Funds futures, there's a 77% chance that the Fed will cut rates next month. Further, the market is pricing in a 62% chance that the Fed cuts twice by its September meeting.On some level, that feels bearish given that the Fed shouldn't be cutting rates in a healthy environment. That said, with the U.S. economy mostly humming along, investors don't want to fight the Fed. If it's willing to be accommodative and dovish, investors don't want to be stubborn.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 5 Top Stock Trades for Thursday: UBER, JBL, ADBE, SHOP That can be a boon for tech stocks, which tend to thrive in a low interest rate environment. If that ends up being the case, look for the PowerShares QQQ ETF (NASDAQ:QQQ) to benefit. Wednesday's WinnersChip stocks, like Advanced Micro Devices (NASDAQ:AMD), Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO) held up well on Wednesday after Tuesday's powerful rally. Should the trade-war rhetoric continue to improve, the semiconductors should continue to see upside.Adobe Systems (NASDAQ:ADBE) jumped more than 5% in Wednesday's session, after the company beat on earnings and revenue expectations. However, management's outlook for next quarter came up short of expectations, which makes today's rally somewhat peculiar. It appears that investors are willing to give ADBE the benefit of the doubt and seem to like the partnership with Microsoft (NASDAQ:MSFT).Speaking of MSFT, shares hit yet another new highs on the day, after doing so on Tuesday as well.Jabil Inc (NYSE:JBL) jumped double digits on the day, rising more than 10% after better-than-expected earnings. Non-GAAP earnings of 57 cents per share was in-line with expectations, while revenue of $6.14 billion beat consensus estimates by $130 million and grew 12.9% year-over-year. Now, the stock is flirting with a major multi-year breakout.T-Mobile (NASDAQ:TMUS) tacked on another 2.4% gain on Thursday, as it looks increasingly likely that it will get the green light from the DoJ to acquire Sprint (NYSE:S). The latter rose 3% on the same optimism, as reports peg Dish Network (NASDAQ:DISH) as the likely suitor to buy the duo's asset sales, which are necessary for regulatory approval.Shopify (NYSE:SHOP) jumped 7.5% to new highs following a positive take from its investor meeting. The stock hit another new all-time high on the day as the Shopify train just keeps on rolling. Should shares hit $356, it will be a triple from the December lows. The LosersVideo game stocks struggled on Wednesday, led lower by Activision Blizzard (NASDAQ:ATVI), which fell about 1%. Take-Two Interactive Software (NASDAQ:TTWO) ended flat after a strong last hour of trading, while Electronic Arts (NASDAQ:EA) ending higher on the day despite a lower open. The group was under pressure Wednesday following video game sales data showing an 11% year-over-year decline for May, while hardware sales slumped 20%.Facebook (NASDAQ:FB) struggled again on Wednesday. The stock opened at its highs on Tuesday, but fell despite announcing its new cryptocurrency. That selling continued today, with the stock down 0.53%. It cast a shadow over social media stocks, with Twitter (NYSE:TWTR) falling 1%, Snap (NYSE:SNAP) dropping 1.3% and Pinterest (NYSE:PINS) sinking 2.5%. The Bottom Line on the Nasdaq TodayThe Fed was the most polarizing event of the day and its aftermath will show itself in the days and weeks to come. Will the event act as a catalyst to propel stocks to new highs? After all, the Nasdaq is less than 200 points or about 2.1% away from those highs now. Or will investors sell the market lower despite the Fed's accommodative stance?Let price be the guide. If Wednesday's closing action is any indication, buyers want in on the market heading into the early part of summer.What I really want to see how is how the Nasdaq, S&P 500 and Dow Jones trade through the rest of the week. While they rose 0.42%, 0.33% and 0.15% on Wednesday, respectively, I want to see if the move has staying power. A strong finish to the week very well could bring new highs, but we need to see that continuation to confirm it. * Dow Jones Today: Stocks Almost Had Some Fed Fun Let's see if chip stocks can continue to push higher and if Adobe can climb up toward $300. And for Pete's sake, can we get some participation from the FANG stocks?Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long AMD, AVGO, NVDA and PINS. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Value Stocks to Buy for the Second Half * 7 Hot Stocks to Buy for a Seemingly Sleepy Summer * 6 Chip Stocks Staring At Big Headwinds in 2019 Compare Brokers The post Nasdaq Today: All Eyes on the Fed appeared first on InvestorPlace.
Mad Money viewers Tuesday night were cautioned by Jim Cramer not to expect a trade deal with China at the G20 summit in Japan next week. Cramer said Broadcom Inc. In the daily bar chart of AVGO, below, we have seen a sharp May decline which included a gap to the downside.
Despite the S&P 500 trading at lofty heights, 8 blue chip stocks are still selling well below their record highs but may be poised for big gains as investors pursue diverse strategies to profit amid a volatile U.S.-China trade war. Some professional investors are wading in to buy beaten down blue chips from the semiconductor industry, including Broadcom Inc. (AVGO), Xilinx Inc. (XLNX), NXP Semiconductors N.V. (NXPI) and Skyworks Solutions Inc. (SWKS). Goldman says these service stocks are much more likely to outperform than stocks in goods-producing sectors.
US equity markets rallied yesterday, and the S&P 500 (SPY) gained almost 1.0%. Markets have now largely recouped their May losses. Along with the dovish stance taken by European Central Bank President Mario Draghi, positive comments on US-China trade talks lifted markets yesterday.
When Donald Trump was elected as the US President in 2016, we saw a sharp rally in some stocks, especially in the metals and mining space. Trump’s pro-growth policies and trillion-dollar infrastructure plans were expected to lift US metal consumption.
If the Fed doesn't signal significant easing ahead, the markets could nosedive. Many analysts agree that the markets might be overpricing the Fed's rate cuts this year.
The Zacks Analyst Blog Highlights: Broadcom, Amgen, NVIDIA, Bristol-Myers and Restaurant Brands
Broadcom (AVGO) slashed its full-year fiscal 2019 revenue guidance for its Semiconductor Solutions segment by 10%, or $2 billion, dampening hopes of a revival in the second half. However, the company experienced strong demand in its networking business and expects revenue in this segment to grow in the double digits in fiscal 2019.