CNBC Investing Club: Cramer’s Morning Take on Broadcom 3/5/26

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Jim Cramer (1:00)

Jim Cramer here to share a short preview of my take on the market from today's members-only CNBC Investing Club morning meeting. Join the club for full access to the morning meeting every day at 1020 a.m. Visit cnbc.com/morningtake to sign up today. That's one word, morning take. All right.

Jeff Marks (1:21)

Why don't we turn to Broadcom now? Really strong earnings last night. Revenue and earnings better than expected. AI revenue, 8.4 billion, more than double year over year, up from 6.5 last quarter. Yes, infrastructure software was a slight miss, but what got the stock higher after hours and today, was this revenue guide for 2027 for AI. They're talking over 100 billion. That's well above the consensus, which was around 85 billion. So analysts are raising their earnings numbers for the next couple of years.

Jim Cramer (1:53)

It's a big increase. The conference call is very close.

Jeff Marks (1:55)

Yes. They're talking about shipping around 10 gigawatts of AI between their customers, Alphabet, Meta, Anthropic, OpenAI.

Hochtan, the CEO, also pushed back on this idea that their gross margins will fall, will be diluted from AI rack sales. I saw one analyst, Melius, he raised his Broadcom 2027 estimates by 24%. So, a significant increase there, not unlike what we saw from NVIDIA when they reported and the numbers were much better than expected.

Jim Cramer (2:27)

Well, but what do you think? It is still down dramatically, even though we know that business is going up a lot with new big client. I could say that this stock, look, I don't know what's going to happen with the war because if oil goes up, this thing goes down. But this is an undervalued stock versus where people thought it was going to be.

Jeff Marks (2:46)

Yeah, I thought, and by the way, a $10 billion buyback was announced too, so they think the same. I think that the concern on Broadcom, on NVIDIA has been, yes, the hyperscalers are spending so significantly, aggressively, but maybe are they at the peak? I thought Broadcom alleviated some of those fears by discussing 27 and the visibility they have into demand there. So I think that's helping and that should help the stock. By the way, just on the buyback too, yes, 10 billion and they bought over 7 billion just in the quarter, so we can see how they feel.

SPEAKER_1 (3:23)

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SPEAKER_2 (3:55)

Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before. Like access to the trade desk, our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy gut check. Need assistance? No problem. Get 24 seven professional answers and live help and access support by phone, email and in-platform chat. That's how Schwab is here for you, to help you trade brilliantly. Learn more at schwab.com/trading.