What's Going On With Broadcom Stock Wednesday?
Broadcom (AVGO) slips over 1% premarket amid rising Treasury yields and tech pressure. Get the latest price action and market setup.
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Broadcom (AVGO) stock gained over 4% on Tuesday as Palantir's strong earnings sparked a broad relief rally across AI chipmakers ahead of AVGO's September report.
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Broadcom (AVGO) slips over 1% premarket amid rising Treasury yields and tech pressure. Get the latest price action and market setup.
Broadcom's AI semiconductor revenue surged 221% year-over-year in Q3, driven by custom AI accelerators (XPUs) designed with hyperscalers like Google, Meta, and OpenAI. Custom chips offer better power efficiency, faster inference, and higher returns on capital compared to GPUs, making them increasingly attractive as hyperscalers face capital constraints. While Nvidia's data center business is currently 4x larger, custom silicon is winning by volume among major customers and could eventually become a bigger business than GPUs.
Warren Buffett's lesser-known portfolio managed through New England Asset Management (NEAM), a Berkshire Hathaway subsidiary, has significantly reduced positions in AI stocks Alphabet and Broadcom during Q2, citing concerns about AI bubble valuations. Instead, the portfolio has allocated over $149 million (17.3%) to S&P 500 index funds (SPY and VOO), reflecting Buffett's long-standing recommendation for retail investors to invest in low-cost index funds that have generated positive returns over every 20-year rolling period since 1900.
Ten stocks now command roughly 41 cents of every dollar in the S&P 500, nearly twice the 23 cents shared by its 402 smallest companies.
Palantir Technologies is positioned as a premier AI software company with strong growth metrics, including 93% revenue growth and 157% net revenue retention among established customers. Despite its high current valuation, analysts project the stock could more than double to $460 per share (138% upside) or potentially reach $688 (256% upside) within five years, assuming modest multiple compression and continued revenue growth.
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