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

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


Related Articles (AVGO)

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

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