Key Takeaways
- Jordan Klein from Mizuho views the recent Broadcom decline as a contrarian buying chance ahead of the company’s September 2 earnings release, with shares trading near $370
- CEO Hock Tan has avoided consecutive negative post-earnings reactions for approximately 30 quarters, spanning nearly seven years
- Investor concerns center on Google developing proprietary ASIC chips, which could reduce Broadcom’s hyperscaler business
- ARK Invest purchased approximately $20.6 million in Broadcom shares while simultaneously offloading around $18.2 million worth of AMD stock
- Broadcom’s post-earnings price swings typically exceed NVIDIA’s by a factor of 2 to 3, amplifying the significance of the upcoming report
Shares of Broadcom have experienced a mid-teen percentage decline over the last two-week period, prompting Mizuho TMT Sector Specialist Jordan Klein to identify what he considers a compelling entry point. As the company prepares to report quarterly results on September 2, Klein highlights what he perceives as an asymmetric risk-reward scenario at approximately $370 per share.
Klein’s primary argument revolves around market sentiment dynamics. He characterizes current positioning in AVGO as the “complete opposite” of conditions 90 days earlier, when the stock entered early June earnings with bullish momentum before plunging roughly 12% in one session following disappointing forward guidance.
The primary concern pressuring shares involves Alphabet’s strategic initiative. Market participants worry that Google’s efforts to create proprietary application-specific integrated circuits will diminish Broadcom’s revenue stream from large-scale cloud computing customers.
While Klein acknowledges this challenge, he believes the market has already incorporated this risk and potentially overreacted. His assessment suggests that consensus expectations have reached peak negativity, a condition that frequently precedes sentiment reversals.
CEO Hock Tan’s Performance Pattern
Klein’s investment thesis leans heavily on historical patterns. He emphasizes that CEO Hock Tan has avoided delivering consecutive negative stock reactions following earnings announcements for nearly 30 quarters, approximately seven complete years.
Klein also highlights competitive dynamics as an important consideration. Both NVIDIA and Marvell Technology have recently utilized their earnings presentations to emphasize accelerating future revenue trajectories. Klein contends that Tan is unlikely to remain passive while competitors control the market narrative.
“No way he sits by and lets the shorts manhandle his stock,” Klein stated in Mizuho’s research commentary. His forecast anticipates that management will proactively confront the Google market-share concern by providing optimistic forward-looking projections extending into 2027 and 2028.
Klein stops short of predicting a dramatic 25% surge. Rather, his perspective is that at the $370 level, the potential upside outweighs downside risk over a timeframe extending beyond six months. Mizuho maintains NVIDIA as its preferred semiconductor selection, positioning Broadcom as a complementary opportunity.
ARK Invest Increases Broadcom Holdings
Cathie Wood’s ARK Invest expanded its Broadcom holdings on Wednesday, acquiring approximately 57,705 shares distributed across several ETFs for a combined value of about $20.6 million. Simultaneously, the firm liquidated roughly 37,977 AMD shares valued at approximately $18.2 million across four exchange-traded funds.
This AMD divestment followed an earlier reduction earlier in the week, suggesting an ongoing reallocation within ARK’s artificial intelligence semiconductor holdings.
ARK also acquired approximately $12.8 million in Cerebras shares and roughly $13.3 million in Cloudflare during the same trading session.
One factor that amplifies the importance of the September 2 announcement is Broadcom’s historical earnings volatility profile. Mizuho research indicates that AVGO typically experiences price movements 2 to 3 times larger than NVIDIA following quarterly reports, regardless of direction.
Market participants will focus on two critical elements from Tan’s commentary: explicit details regarding the Google ASIC partnership’s future trajectory, and concrete revenue forecasts for fiscal years 2027 and 2028 related to artificial intelligence opportunities.
Mizuho’s research note did not include a specific price target or formal investment rating for AVGO shares.
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