Cramer's Morning Take: Broadcom 12/13/24

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Jim Cramer (1:02)

I'm Jim Cramer, and you're about to hear a sample taken directly from today's CNBC Investing Club morning meeting. Now, we had a market yesterday where we looked like, I thought we were going to break the spell of negativity, but we didn't. And it continues today. And it has to do with certain breadth issues that we know are not possible.

Jeff Marks (1:26)

Yeah, Deutsche Bank put out a good stat. Yesterday was the ninth consecutive day of more fallers than risers in the S&P 500 It's the longest streak since 2001, and we're trying to come up with maybe some reasons why the 10-year yield continues to march higher ahead of next week, where the Fed is likely will cut rates by 25 basis points.

Jim Cramer (1:47)

Well, we have minus two on the oscillator. We're not oversold enough to be able to go in.

Jeff Marks (1:51)

Yeah, but getting close, getting close.

Jim Cramer (1:54)

Maybe some changes next week when we have our club meeting.

Jeff Marks (1:57)

Yeah, but there are individual stories that are shining. The biggest one today is Broadcom joining the $1 trillion market cap club with this move today. And it's funny because the results itself, roughly in line, revenue was still a big 51% earnings of 28%. You had semis, semiconductor revenue do better than software. Software, some deals slipped into next quarter.

Jim Cramer (2:23)

The numbers, the projections of how much business is going to be the serviceable addressable market is gigantic.

Jeff Marks (2:29)

The commentary is so bullish on the AI story. They're talking about this serviceable addressable market for their three AI customers. Google met a likely bite dance TikTok. $60 to $90 billion by Fiscal 2027 Now, this is a catch-all figure. Right, right, the very fair said. It's custom chips, it's networking, it's memory, maybe some GPUs as well. But it's very bullish. And they're talking about each customer ramping up to one million unit clusters by 2027 This is much more bullish than what anyone anticipated. And even on top of that, they're talking about adding two more custom chip customers.

Jim Cramer (3:05)

Well, because you need to have a million unit clusters by 2027

Jeff Marks (3:08)

Yeah, and they're talking these new customers could be Apple and OpenAI. These are media reports.

Jim Cramer (3:13)

And they have Google, they have Meta. I mean, they are the most unknown trillion dollar powerhouse. It's just incredible. And we got involved. I've known Hock for many, many years. He's an inquisitive fellow. Once he gets things done, he takes out costs in the VMware. We don't even talk about the VMware costs take out.

Jeff Marks (3:31)

Yeah, synergy is better than expected. And you know, it's interesting. The last call, the call before this, Hock was saying, no, very happy with just working on VMware. Now it sounds like he has his eye on M&A again.

Jim Cramer (3:43)

Yes, it sure does.

Jeff Marks (3:44)

They raised the dividend yesterday, no buybacks. Maybe they're looking to get the balance sheet in line to make their next deal. You have a more friendly regulatory environment too under the new administration.

Jim Cramer (3:53)

He did not take down as much debt as I would have liked. He didn't crunch a lot of debt.

Jeff Marks (3:57)

Yeah.

Jim Cramer (4:00)

Start your day with my outlook on the daily market every morning at 10, 20 a.m. Visit cnbc.com/morningtake to access all the benefits of being a CNBC Investing Club member.

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