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Chip Stocks Fall In Sympathy With Broadcom After Q2 Sales Miss, Guidance Cut

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Chip Stocks Fall In Sympathy With Broadcom After Q2 Sales Miss, Guidance Cut

Chip stocks were trading mostly lower Friday after Broadcom Inc (NASDAQ: AVGO) issued a concerning second-quarter earnings report and cautious outlook.

What Happened

On Thursday, Broadcom said it earned $5.21 per share in the second quarter on revenue of $5.517 billion. Street analysts were expecting the company to earn $5.18 per share on revenue of $5.69 billion.

On top of a the second-quarter revenue miss, Broadcom revised its full-year revenue outlook from $24.5 billion to $22.5 billion. The chipmaker cited a "broad-based slowdown in the demand environment" due to continued geopolitical uncertainties. The company also highlighted the "effects of export restrictions" on one of its largest customers — most likely China-based Huawei.

Why It's Important

Broadcom CEO Hock Tan said during the company's post-earnings conference call the chip environment is "very, very nervous."

In a Tweet, CNBC's Jim Cramer wrote the conference call was "truly depressing" and "not good for the group."

What's Next

Broadcom said its customers are "actively reducing" their inventory levels. As a result, the company said it's now "taking a conservative stance" for the rest of the year.

Price Action

The following is a summary of how notable chip stocks were trading at the time of publication Friday: 

  • Broadcom: down 7.09%. 
  • Skyworks Solutions Inc (NASDAQ: SWKS): down 3.86%.
  • Analog Devices, Inc. (NASDAQ: ADI): down 2.53%. 
  • Xilinx, Inc. (NASDAQ: XLNX): down 2.54%. 
  • Micron Technology, Inc. (NASDAQ: MU): down 2.97%.
  • Texas Instruments Incorporated (NASDAQ: TXN): down 3.41%.
  • Advanced Micro Devices, Inc. (NASDAQ: AMD): down 3.79%.
  • Nvidia Corporation (NASDAQ: NVDA): down 3.43%.
  • Qualcomm, Inc. (NASDAQ: QCOM): down 2.06%.

Related Links:

Analysts Discuss Broadcom's New Supply Agreement With Apple

With Semiconductor Demand Uncertain, KeyBanc Presents Stock Ideas

 

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Posted-In: CNBC Hock Tan Jim CramerEarnings News Guidance Top Stories Media Best of Benzinga

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