Contrarian Value Ideas

[gfp927z]

Derf, Good point about the class action suits, which will be a thorn in ADM's side for quite a while. That said, the chart looks like it might bounce up to the 50 MA, even if it's only a short term trade. It's a dominant company at a 30% discount, so I was thinking about a small position for the longer haul, but may just watch from the sidelines.

With Broadcom, a pullback will probably be healthy since the semis and Ai stocks have had such a big run. Along with AVGO, I have a little in KLAC, MPWR, ADI, MCHP, and NVDA. Only small positions, but I figure this makes it easier to 'stay the course' :o)


>>> Why Broadcom Stock Was Sliding Today


by Jeremy Bowman

Motley Fool

March 8, 2024


https://finance.yahoo.com/news/why-broadcom-stock-sliding-today-170211445.html


Shares of Broadcom (NASDAQ: AVGO) were moving lower Friday after the diversified semiconductor company posted solid results in its fiscal 2024 first-quarter earnings report after the market closed Thursday, but failed to raise its guidance.

High expectations were also baked into the stock. The company is viewed as a beneficiary of the AI boom, and as its shares have risen in recent months in consequence.

As of 11:59 a.m. ET, the stock was down by about 6%.

A good -- but not good enough -- quarter

Broadcom, which also just completed its purchase of VMware, said that revenue jumped by 34% in the quarter (which ended Feb. 4) to $12 billion, edging past the consensus estimate of $11.72 billion. Organic revenue, which excludes the impact of the VMware acquisition, was up 11%, accelerating from just 4% growth in the previous quarter, and the company said it was seeing strong demand for AI-related products.

In its semiconductor solutions segment, it reported 4% growth to $7.4 billion, while VMware drove a 153% jump in infrastructure software revenues to $4.6 billion.

Further down the income statement, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 26% to $7.16 billion, and adjusted earnings per share rose 6.4% to $10.99, which beat the consensus estimate of $10.29.

CEO Hock Tan noted the strengthening tailwind in AI, saying, "Strong demand for our networking products in AI data centers, as well as custom AI accelerators from hyperscalers, are driving growth in our semiconductor segment."

Guidance falls a bit short

Friday's share price pullback seems to be driven by the company's decision to maintain its full-year guidance at $50 billion in revenue and $30 billion in adjusted EBITDA. It kept that steady forecast even as it has had one quarter to integrate VMware and as it's seeing increased demand for AI products.

Even with Friday's slide, Broadcom shares are still up 18% year to date and have more than doubled in the last year, showing the stock is benefiting from AI tailwinds. While this session's dip may be disappointing for investors, it shouldn't change anyone's long-term thesis on the stock.

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