Where AVGO Stands in AI Space After Earnings, Stock Sees "Hedge Fund Blowup"

**SPEAKER_1** (0:00)
It's now time for the watchlist panel, and we are looking at Broadcom's earnings. So joining us to discuss this, Melissa Armo, founder, owner, the stock swoosh, and Jay Hatfield, CEO and CAO, infrastructure capital advisors. Good afternoon to both of you. Melissa, let's kick things off with you. The earnings were good. Why is the stock down?

**Melissa Armo** (0:18)
What's a classic example of if you want to trade the earnings, you're not necessarily going to get the move you want, because if you thought, oh, good earnings, the stock's gonna be up, that didn't happen today. So sometimes you have great earnings, the stock falls. Sometimes you have bad earnings and the stock rallies. So the stock fell $30 from yesterday till today and fell tremendously this morning while the market's rallying. I mean, look at the market right now. The market is breaking out two days before a holiday, which is kind of interesting, and AVGO can't get a breath of life. Now, it doesn't mean that the stock is not gonna recover. It's bouncing here this afternoon. But the last time the stock made brand new all-time highs was several months ago.
So whatever the expectations are on this, they just didn't seem to be meeting the expectations that the street sees for it, or it would have had a positive reaction today and been up with the market and everything else today. I mean, Nvidia is rallying. There's lots of things in the sector that are rallying right now, and this is not.

**SPEAKER_1** (1:16)
A lot of cross currents, as you say, but we've come off the lows now. To your point, some of the semiconductor chips are actually turning around now, turning positive, and Broadcom, which was down about 6% at the start of the session, down only 3% as we stand. Jay, I mean, what do you make of this? Because there was a lot to like in this report. I mean, tripling profits, nearly doubling revenue, good visibility. It just seemed to be the guidance that was the issue. Do you think also it alleviated some of Wall Street's concerns going into the print about what it would say about this Google partnership with Marvell?

**Jay Hatfield** (1:51)
Well, the key factor to focus on was the guidance for fiscal 28 They raised guidance on EPS to $30 from 25
That was POSIX's last call. It was way more of a disaster because POCTAN gave no guidance.
But there was one disappointing element, and I agree with the prior comments. There's a lot of hedge funds in these names, and they were constrained on revenue by supply. And so that, even though there was a guide up of $5, probably disappointed a lot of hedge funds. And I think the key to analyzing today's market is a hedge fund blow up. Most of these chip names are way over. The hedge funds are way too long, them. But we still hold Broadcom in our QVOL ETF. And we do have a 450 target. We think it's going to rerate to only 15 times, 28 earnings, but we still like it. And it is coming back. And today's movements are mostly, we believe, hedge funds, unwinds, liquidations.

**SPEAKER_1** (3:06)
Okay, it kind of makes sense because obviously we've seen this back and forth between hardwares and softwares, and softwares are up on the day. And, you know, there was some thinking maybe in the last couple of weeks that maybe we were getting out of this kind of zero sum game where these two sectors could actually rally in unison, but we're kind of back to this ping pong match here. So maybe the technicals make sense. But yes, but the only blemish that was obvious seemed to be that the Q4 guidance came in a tad light. So in that case, Melissa, I'm just wondering what you believe the future looks like for this company, particularly with the Google Marvell News and obviously what we've heard from Nvidia today as well.

**Melissa Armo** (3:48)
Well, Marvell's rally today, but Marvell, remember, was down on earnings too. That was about a week ago or so. So that actually sold off quite a lot. Went all the way down to 200 on the earnings. It's coming back today. It's rallying today with the market, but that did not react well to the earnings too. I think it's too early to say with all of these companies. They can give good outlook for the future. They could get bad outlook for the future. There's a lot of discussions going on right now around AI.
Again, we have these IPOs that are going to be coming out in the next several months. I don't think till 2027