Key Takeaways
- Mizuho’s Jordan Klein views Broadcom’s recent decline as a contrarian opportunity ahead of the company’s September 2 earnings release, with shares trading near $370
- CEO Hock Tan has avoided consecutive negative earnings reactions for approximately 30 quarters, spanning nearly seven years
- Investor concerns center on Google’s proprietary ASIC chip strategy potentially reducing Broadcom’s hyperscaler business
- ARK Invest purchased approximately $20.6 million in Broadcom shares while trimming its AMD holdings by roughly $18.2 million
- Historical patterns show Broadcom’s post-earnings volatility typically exceeds NVIDIA’s by a factor of 2 to 3, amplifying the significance of the upcoming report
Shares of Broadcom have retreated by double digits over the last two weeks, a decline that Mizuho TMT Sector Specialist Jordan Klein believes presents a compelling entry point. With the company scheduled to report quarterly results on September 2, Klein is highlighting what he characterizes as a favorable risk-reward scenario at the $370 price level.
Klein’s analysis rests heavily on investor sentiment dynamics. He observes that current positioning in AVGO represents a complete reversal from conditions three months ago, when the stock carried strong bullish momentum into early June earnings before plunging approximately 12% in a single session following disappointing forward guidance.
Current market anxiety revolves primarily around Google’s strategy. Market participants fear that Alphabet’s development of proprietary application-specific integrated circuits will diminish Broadcom’s revenue stream from major cloud computing customers.
While Klein acknowledges this concern carries validity, he believes the market has overreacted and fully discounted the potential impact. His assessment suggests that consensus expectations have reached peak negativity, a condition that frequently precedes sentiment reversals.
CEO’s Historical Performance Pattern
Klein’s investment thesis draws significantly on historical precedent. He highlights that CEO Hock Tan has maintained a streak of avoiding consecutive negative post-earnings stock reactions for nearly 30 quarters, equivalent to approximately seven years.
Klein also factors in competitive dynamics. Both NVIDIA and Marvell Technology recently used their quarterly reports to emphasize accelerating future revenue trajectories. Klein contends that Tan is unlikely to remain passive while competitors control the narrative.
“No way he sits by and lets the shorts manhandle his stock,” Klein stated in Mizuho’s research commentary. His projection is that management will proactively confront the Google market share concerns by offering optimistic revenue projections extending into 2027 and 2028.
Klein stops short of forecasting a dramatic 25% rally. Instead, his position is that the current $370 price point offers more potential upside than downside risk over a six-month or longer timeframe. NVIDIA continues to hold Mizuho’s top semiconductor recommendation, with Broadcom positioned as a complementary play.
ARK Invest Increases Stake
On Wednesday, ARK Invest expanded its Broadcom holdings, acquiring approximately 57,705 shares distributed across several ETFs totaling about $20.6 million. Concurrently, ARK divested roughly 37,977 AMD shares valued at approximately $18.2 million across four exchange-traded funds.
This AMD reduction represented the second trimming action within the same week, signaling an ongoing reallocation within ARK’s artificial intelligence semiconductor portfolio.
ARK simultaneously acquired approximately $12.8 million worth of Cerebras shares and around $13.3 million in Cloudflare during the same trading session.
The September 2 earnings event carries elevated importance due to Broadcom’s characteristic volatility patterns. Mizuho observes that AVGO typically experiences price swings 2 to 3 times larger than NVIDIA following quarterly announcements, regardless of direction.
Market participants will focus on two critical elements from Tan’s presentation: explicit updates regarding the Google ASIC partnership trajectory, and concrete revenue forecasts targeting fiscal years 2027 and 2028 within the artificial intelligence sector.
Mizuho’s research note did not include a specific price target or formal rating designation for AVGO.
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