11AM Hour: Broadcom Shares Tumble, Tanger CEO on the Consumer & SpaceX Roadshow Kicks off Today 6/4/26

SPEAKER_1 (0:00)

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Carl Quintanilla (1:03)

Good Thursday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Leslie Picker here at Post 9 of the New York Stock Exchange. Sara Eisen's on assignment today. Broadcom is leading this pullback in technology today after a nearly two week rally. Citi's head of tech research, Heath Terry's with us to break down what it means for the high-flying tech names and why chips and memory continue to be the bottleneck for soaring AI demand.

Leslie Picker (1:24)

Plus, with inflation already squeezing American consumers and the Fed saying affordability pressures could worsen, we'll get the latest read on the consumer and the CEO of outlet retailer, Tanger.

Carl Quintanilla (1:34)

Homeowners suddenly pulling their houses off the market. Some new data showing frustrated sellers are giving up at the fastest pace since 2020 and we will try to explain why. As for the market, you can see the difference as the Dow gets some love as opposed to the NASDAQ. Sector-wise, actually quite positive breadth with a number of sectors very strong. Financials up 2 percent plus, one of its best days versus the Q's in more than a year.

Leslie Picker (1:59)

We'll start though with this morning's tech movers. Christina Paretzenevela is looking at Broadcom and Seema Modi on Crownstrike. Both of those stocks falling after their respective earnings reports. Let's get to Christina first.

Christina Parzechevela (2:11)

Well, Broadcom shares are down quite a bit now about 15 percent. Strong numbers on the surface, but just not strong enough for this crowd. Q3 AI chip revenue guided to about 16 billion bucks. That's up more than 200 percent year-over-year. But the Street was looking for a higher number, specifically buy side. With the stock really running up 13 percent just over the last five sessions, getting into the print last night, even a near miss hurts. The bigger blow also came from CEO Hawk Tan reiterating on the call, not raising the fiscal 2027 AI revenue target of 100 billion dollars. So he used the word reiterate. Buy side expectations were already closer to 150 billion dollars, so a reiteration just wasn't what they came for. Then there's the competition question. Google is now working with MediaTek on inference chips, an acknowledgement that Broadcom is no longer the only design partner for its largest customer.

Wells Fargo is hearing from investors this morning who said it sounded like quote, an admission of defeat. Morgan Stanley is a little bit more measured saying Broadcom can hold at least 80 percent of its served market long term, but the commentary really opened the door to a narrative that the stock didn't need right now. Gross margins also guided down to 74 percent on product mix, guided down. 74 percent is still high and the anthropic deal shifting from racks to chips only still weighed on the AI revenue number even though a lot of analysts already expected that move. Broadcom's loss may be someone else's gains. Wells Fargo's flagged positive read throughs to Marvell as well as Intel even though everybody's read this morning Intel down to two and a half percent as investors really assess where custom chip share count could shift to. On the analyst side, Bernstein says shares may pause for the next couple of quarters. Zoho says buy this pullback with a $530 target. Bank of America is keeping its buy rating pointing to nearly 100 percent AI revenue growth in fiscal 2027 So according to the vast majority of analysts who have put out these notes at least 10 on the street, the bull case hasn't changed for Broadcom. It's just the timeline got a little less certain guys.

Leslie Picker (4:15)

Christina, I'm curious where things stand with scarcity for a company like Broadcom, because you hear things like downstream customers looking to mix up their supply chains for chips. And all we hear about is scarcity. So I'm just curious how that picture looks for Broadcom in particular.

Christina Parzechevela (4:34)

Well, I think Broadcom will take the same narrative as NVIDIA, is that the pie keeps growing. Everybody wants to build their own chips and they're having difficulty doing so, whether it be because TSMC doesn't have enough capacity or they can't get memory chips in time or to the full extent that they want to.