Cramer's Morning Take: Broadcom 6/13/24

Jim Cramer (0:01)

Hey, it's Cramer, and this is my morning take on the market from today's CNBC Investing Club Morning Meeting.

Being here today is once again, not deflation, but a lowering in inflation. This time, it's the PPI, but it's not enough to drive things higher today. It's kind of getting discounted in the market.

Jeff Marks (0:20)

Yeah, but nonetheless, I think it's an encouraging sign.

You know, especially after the Fed meeting yesterday, where it seemed like PAL is remaining data dependent, doesn't necessarily want to put out some predetermined path, but PPI encouraging, jobless claims a little bit higher than expected, so maybe some more loosening, but in the job market. But today is also about the AI trade after Broadcom earnings last night, which were great earnings. And it's why we have said this is behind NVIDIA, the second best way to play AI in the chip space.

Jim Cramer (0:59)

We tend to kick ourselves, versus, I was looking at what we did with AMD, and we took the money and put it in Broadcom, and Broadcom doubled, AMD did not.

Jeff Marks (1:07)

Yeah, I think AMD's up maybe like 8% year to date, obviously Broadcom up 50% and even more going back to last August.

Jim Cramer (1:14)

In your excellent note last night, you made it clear that AI is inflecting huge, but also there's some bottoming and another part of it.

Jeff Marks (1:23)

Yeah, storage, and I think too, when you look at the wireless, they guided flat year over year, but there's content gains in the iPhone, with the Apples they made customer, and we know, we're big believers that these AI integrated smartphones will lead to a very strong upgrade cycle. So I think that's positive there.

Jim Cramer (1:43)

That's more than half of the company. Can you imagine what happens when it turns? That's why you can't sell it yet.

Jeff Marks (1:49)

Yeah.

Jim Cramer (1:49)

I mean, are you inclined to think that we should?

Jeff Marks (1:51)

I don't think it's that big, but...

Jim Cramer (1:53)

But do you want to sell some? I want to hold onto it.

Jeff Marks (1:56)

Well, look, I think it's obviously, it's up to you today.

Yeah, we'll see in the days ahead. Obviously the split, 10 for one, that's not forget. We also see some strong action after that.

Jim Cramer (2:06)

I mean, maybe when you get some additional shares in the split, maybe we do lighten up some.

Jeff Marks (2:11)

Yeah, but also VMware, right? We have to talk about what's happening there because what Broadcom does best is M&A and that continues to show with the VMware acquisition in terms of good revenues, but also on the expense side, the cost synergy is tracking better than expected. That's gonna drive earnings higher.

Jim Cramer (2:31)

But what did you think about the idea that they have such a huge amount of debt, including what, more than 20 billion that's variable?

Jeff Marks (2:40)

It'll get paid down.

Jim Cramer (2:41)

2 billion a quarter?

Jeff Marks (2:43)

I think, actually, by the end of the year, their leverage ratio will be kind of back to where it was, where they start looking at M&A again, which was actually a questionable thought.

Jim Cramer (2:53)

On the call, you're dealing with a very smart CEO.

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SPEAKER_3 (3:09)

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