Broadcom Slides After Non-AI Sales Drag Down Forecast

Published: Sep 05, 2024 Duration: 00:02:52 Category: News & Politics

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Okay. So the fiscal fourth quarter overall revenues, 14 billion. Not as strong as hoped. Full fiscal year, $12 billion in sales. That's good. So we're basically concluding that the sort of more legacy businesses for Broadcom aren't doing as well right now. Was that your reads? Exactly. I mean, that was the only negative, but in my opinion, it was not very surprising. We have heard the same story across of most of its peers who have already reported, because, remember, Broadcom is the last one to report. So that should not have caused this kind of a reaction. I think another thing going here is the air was upside 8 to 12 billion. Maybe investors were hoping for even stronger upside there. That's been the story of this entire earnings season. I do want to look at the sort of non-core part, because as you know, Apple on Monday and the iPhone, did we learn anything new about that business and perhaps the trajectory of it? But really from along with Broadcom and Qualcomm and other chip players, we have not seen significantly stronger than seasonal outlooks coming into this iPhone launch, despite the reports that we have been hearing that Apple iPhone shipments are preparing for 5 to 10% higher shipment volume this year. Now, 2023 was a down year. So we do expect volumes to be higher because of that. But we are not seeing any taking anything out of ordinary from at least Broadcom yesterday. I want to go to what sort of Truist Securities is saying. I hate to name the people on the street because your expertise is so important to us, but he's saying basically it's unpredictable, it's lumpy when it comes to revenue growth because of as and when we're going to get customers named. We were thinking that might be more. When will we hear of actual customers wanting their chips made by Broadcom? Well, at this point, it's not clear. But, you know, the the fact about being lumpy, that's true. However, it does. That should not take away anything from the strength of the growth. We expect the board, the S6 and the connectivity businesses to grow even stronger next year. And remember, these are still very highly concentrated few customers, three at this point. So you are going to expect lumpiness from quarter to quarter as they adjust their timing of purchases and build out. We asked you yesterday a slightly unfair question, but I ask it to you again because you are a fundamentally driven person, but the market just seemed to be so exuberant around these air names. We've got a deja vu. Nvidia sold off when its numbers were good. Broadcom doing the same. Exactly. I mean, what we are seeing is even solid or strong reports are not strong enough because the expectations are just stronger, higher than that. But I just remind people to go back to fundamentals and see. We saw the same thing again from Broadcom. We saw from Nvidia. The demand signals keep going stronger and stronger. Their bookings and backlogs continue to increase. So there's no such real fundamental risk factors here, especially when it comes to chips.

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