Ian AinsworthBroadcom Corp.BRCMBUY ON WEAKNESSJun 13, 2003

Don't buy it on days like today when it's in freefall (-11.43%), but a little later after the sellers are done. He owns a lot of this. It will take time for AVGO will mend. He still likes it.

EPS of $1.95 beat estimates of $1.87; revenue of $18.0B beat estimates of $17.47B. Broadcom beat estimates again, with AI strength driving upside across the 1Q (20% above consensus) and fiscal 2026-27 setup. A $73 billion AI backlog over the next six quarters vs. analysts' $69 billion, with room for further upside, underscores durable momentum. This is aided by Anthropic's additional $11 billion order, on top of a prior $10 billion, and the conversion of a fifth customer. Broadcom's pivot toward rack-level system delivery further boosts content per deployment and extends visibility. The 1Q software outlook was weaker than expected on seasonality, yet full-year growth at low-double digits exceeded prior expectations. Gross margin will face pressure as XPU and system shipments scale in 2H26, though operating margin remains supported by software leverage and the scale of AI. The stock drop today likely reflects some profit-taking and year-end positioning. But also general concerns on AI. The backlog of $73B, even with a 'beat' was seen as 'not enough' and there were worries about OpenAI's committment as a customer. Analysts also expressed some concern on weakening margins, as the ramp of the customized chip business is costing AVGO money. Considering the results and outlook, the decline does seem excessive to us, but right now investors are stressing out about the AI trade in general. 
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We would be fine with a full position in the company, assuming a growth-focused investor and an appropriate timeframe. Earnings dates can result in high volatility around a stock. It is a two-sided coin: earnings surprises can see a stock get called away. But upcoming earnings also tends to increase options premiums, so shareholders can still benefit. If doing an options strategy, since earnings are a regular occurence, we would not specifically work around or try to optimize strategies around earnings dates. Consistency is usually better.
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Fantastic company. Stock performance has been incredible the past 10 years. Mistake has only been to sell shares. Would recommend buying and/or holding. 

Recent market sell-off creating buying opportunity. Earnings have been strong, and getting better. A.I. cycle just beginning to start. Fundamental story appears to be getting better (earnings etc.) 

Would not advise buying. Seeing stock price remain where it is. Is cheaper, but not getting growth. 

It reports next week. He wants to see around 5% revenue and earnings growth with demand growing as margins hold steady. Watch for guidance about data centre demand. A great way ex-Nividia to play AI. 

Good business with steady compounding ability. Asset light business. High cash flow. Actively buying back shares. Paying steady dividend. Returns on invested capital in 30-50% range. Not founder led and founder owned, but very strong business. Would recommend holding as business is able to compound. Very good long term hold. 

Prefers this to Nvidia, because its valuation is a lot more reasonable.

Broadcom re-rated like all AI names, trading at 14x PE to start the year and 21x (vs. peers' 25-29x). Yesterday, they raised guidance from 10% AI exposure to 25% or more in 2024. A huge move. Has long owned this. Down 6% today, which is a gift.

Down 6% today, but up 4% yesterday to hit a 42-week high. They are clearly shifting to AI, a positive. They have a solid base to move from. This is a lot cheaper than Nvidia. Likes to own this. Buy it on sale. They beat EPS.