Cramer's Morning Take: Broadcom 9/6/24

Jim Cramer (0:02)

Hey, it's Cramer, and this is my morning take on the market from today's CNBC Investing Club Morning Meeting. We have a market that should have been defined by just interest rates, because we had an employment number that was pretty much perfect. Rates go down, but we don't have a lot of inflation. We like that, but what's happened immediately is we go and say that the economy is slower, so we have to sell the semiconductors. And that was hastened by the fact that people think that broadcom had a weaker quarter. So I'm going to go right to these and say, the yield reaction is positive, the stock reaction is not, which is highly unusual.

Jeff Marks (0:36)

Yeah, I mean, look, I think that there's a debate right now, 25 versus 50 at the meeting. When the number first came out, it looked like 50 might have been the market leaning that way, but it's kind of reverted back to 25 You have seen yields move up. The first move was wrong. I mean, the market was initially higher around the opening.

We've given up the gains.

Jim Cramer (0:57)

Look, when you have a big futures decline in the morning, those people are going to try to make themselves right. They look so stupid. They can come back and knock the futures. But when you get Europe close, you get a sense that maybe things have gotten too negative. But jeez, we're in September, Jeff.

Jeff Marks (1:14)

It's just a tough tape. It's just a tough tape. I mean, we've seen it this week. So far, we're down every single day. It's just been a rough tape, but that's fine. It won't last forever.

Jim Cramer (1:24)

Well, especially if we get oversold, but we have to get, we have plus 1.6, as you mentioned this morning before we came in here, we want to see minus four. We get to minus four of them, we're going to start using some of that cash work.

Jeff Marks (1:34)

Yeah, and maybe some could argue the market needs to kind of retest the yen carry trade blow up lows from the beginning of August.

Jim Cramer (1:42)

Which would be 92 for NVIDIA, 98 at the end of the day.

Jeff Marks (1:45)

Yeah, so I look, I think some patience is warranted. That's all. But what to do with...

Jim Cramer (1:51)

Down 15, buy. Yeah, small.

Jeff Marks (1:54)

So Broadcom...

Jim Cramer (1:55)

I would love to buy today right now. Can't be restricted.

Jeff Marks (1:58)

We are restricted, and we'll be restricted on Monday. That's the nature of the product. But let's talk about the quarter. So they did beat on the top and bottom line. AI sales were strong, but they missed some lofty expectations, although they did raise the full year guide to 12 billion. Remember, they do both networking equipment and also custom silicon.

Jim Cramer (2:19)

How about the upgrade cycle we're gonna get here that's so important?

Jeff Marks (2:22)

Yeah, so outside of the AI chip business, the legacy chip business, if you will, weak but bottomed, I think Coq made that call last night, pointing out when asked if we could even return to some of the higher levels in previous cycles, he's pretty confident because you're gonna need more storage, more servers.

Jim Cramer (2:42)

VMware, really terrific.

Jeff Marks (2:45)

Yeah, I mean, they're pretty much a year ahead of the adjusted EBITDA target. Revenues are growing and they are dropping operating expenses, so that's just a big uplift to profitability.

Jim Cramer (2:57)

But against that, we have the AI being not as... No, it didn't blow away.

Jeff Marks (3:01)

No, it did not. Just like even though NVIDIA did beat EnGuide up, it wasn't enough for the market for now.

Jim Cramer (3:07)

And that's been the story of this earnings period, Tag M, which is that it's real good but not good enough. Start your day with my out book on the market every morning. Visit cnbc.com/morningtake to become a CNBC Investing Club member at a special rate today.

SPEAKER_3 (3:27)

All opinions expressed by Jim Cramer on this podcast and in connection with the CNBC Investing Club are solely Cramer's opinions and do not reflect the opinions of CNBC, NBC Universal or their parent company or affiliates, and may have been previously disseminated by Cramer on television, radio, internet or another medium. No specific outcome or profit is guaranteed in connection with your reliance upon or other use of the content from Cramer. The opinions offered in connection with this podcast and the CNBC Investing Club are not an attempt to induce any particular trading behavior, investment or strategy. You should be aware of the risk of loss in following any strategy or investment discussed in the content from Cramer. To view the full CNBC Investing Club disclaimer, please visit cnbc.com/investingclubdisclaimer.