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- 📈 Broadcom’s 220% AI Surge
📈 Broadcom’s 220% AI Surge
Tesla market cap soars by $240B, Warner Bros. Discovery stock jumps, Costco earnings continue growing, Boeing to invest $1B in 787 production, Broadcom beats earnings expectations
Evelio Silvera
December 13, 2024
Good morning.
⚡ The Fast Five → Tesla market cap soars by $240B, Warner Bros. Discovery stock jumps, Costco earnings continue growing, Boeing to invest $1B in 787 production, Broadcom beats earnings expectations
🔎 Market Trends → Wall Street closes lower as investors assess data after recent gains; Nasdaq Futures Rise on Strong Earnings Reports
And now…
⏱️ Your 5-minute briefing for Friday, December 13, 2024:
MARKET BRIEF
Before the Open
As of market close 12/12/2024.
Pre-Market
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Fear & Greed
Markets in Review
Markets Stumble After Surprise in Producer Prices
The Nasdaq fell 0.7% to 19,902.8, retreating after crossing the 20,000 milestone Wednesday. The S&P 500 and Dow dipped 0.5%, closing at 6,051.3 and 43,914.1, respectively, with consumer discretionary and healthcare leading the declines.
The Big Picture:
Thursday's hotter-than-expected Producer Price Index (PPI) jolted markets, rising 0.4% month-over-month and 3% year-over-year, surpassing the expected 2.6% annual increase. Higher wholesale costs, particularly in food, spooked investors, fueling concerns over potential inflation stickiness.
Despite the headline surprise, analysts still anticipate a 25-basis-point rate cut from the Federal Reserve next week, with markets largely pricing in the move. Labor data also showed an uptick in jobless claims, adding to a mixed economic picture.
Oil prices edged down 0.3% to $70.05/barrel, with conflicting forecasts from the International Energy Agency (IEA) and OPEC shaping supply expectations. Meanwhile, gold slid 1.8% to $2,706.50/oz, and silver tumbled 4.2% to $31.59/oz, as safe-haven demand eased.
Market Movers:
Adobe (ADBE): Sank -13.7%, the worst on the Nasdaq and S&P 500, after issuing a soft fiscal 2025 outlook, overshadowing better-than-expected Q4 results.
Warner Bros. Discovery (WBD): Jumped +15.4%, topping both indexes, as its new corporate structure was seen as a move to unlock shareholder value in a shifting media landscape.
Nordson (NDSN): Dropped -8.2% following a downbeat fiscal Q1 forecast, despite strong Q4 performance.
Boeing (BA): Rose +1.1%, buoyed by plans to invest $1 billion in its South Carolina facility, reinforcing confidence in its long-term production pipeline.
What They’re Saying:
"The PPI surprise highlights how inflationary pressures aren’t vanishing overnight. But with the Fed still poised to cut rates, this dip may offer buying opportunities," said a strategist at Oxford Economics.
WHAT WE’RE WATCHING
Events
There are no events scheduled for today.
Earnings Reports
Today: Soho House, Veru Inc.
Monday: BHP Group, Compass Minerals
MARKET BRIEF
Leading News
Broadcom's AI Chip Sales Surge Creates Profit Beat
Why it matters:
Broadcom's eye-popping 220% surge in AI revenue signals a seismic shift in computing that could reshape the semiconductor landscape – and savvy investors' portfolios.
Zoom Out:
The chipmaker's latest earnings tell a story far bigger than quarterly beats. CEO Hock Tan has masterfully positioned Broadcom at the crossroads of two massive trends: the AI computing revolution and cloud infrastructure buildout.
While the headline numbers impressed – $14.05B in revenue and an EPS of $1.42 – the real story lies in the company's ambitious projection of a $60-90B total addressable market by 2027 for AI chips and networking components. That's not just corporate optimism; it's backed by concrete partnerships with major cloud players.
Deep Dive:
The AI Moat: Unlike previous chip cycles, this boom has staying power. Broadcom's custom AI accelerators (XPUs) and networking solutions are becoming mission-critical infrastructure for cloud giants – creating high-margin, recurring revenue streams that Wall Street often undervalues.
Show Me The Numbers: The 220% year-over-year AI revenue jump to $12.2B isn't just impressive – it's sustainable. With three major cloud customers each planning to deploy 1 million AI chips by 2027, Broadcom is building a fortress of long-term contracts.
Beyond Pure AI: The VMware acquisition, though less flashy than AI headlines, gives Broadcom a strategic foothold in enterprise software, diversifying revenue and reducing cyclical risk.
Market Pulse:
"This isn't just another chip cycle – it's the beginning of a multi-year transformation in computing infrastructure," says veteran semiconductor analyst Dan Ives. "Broadcom is selling picks and shovels in an AI gold rush."
Bull’s Take:
Smart investors should view Broadcom not as a traditional chipmaker but as an AI infrastructure play with a growing software moat. While the stock isn't cheap at these levels, the company's expanding competitive advantages and robust dividend growth (11% increase planned) suggest this could be the early innings of a much longer game.
Headlines
Tesla’s market cap soars by $240 billion amid stock’s win streak to record highs (link)
Warner Bros. Discovery stock surges as it restructures its business (link)
Costco Earnings Surge As Growth Sharply Accelerates (link)
Boeing to invest $1 billion to help increase 787 production in South Carolina (link)
RH says demand is through the roof despite ‘worst’ housing market in decades (link)
FTC accuses top U.S. liquor distributor favored Costco, Kroger, other chains over small businesses (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
*Hat-tip to Wall Street Memes