- Bull Street
- Posts
- 📈 Broadcom's 25% Revenue Surge
📈 Broadcom's 25% Revenue Surge
Trump establishes U.S. strategic bitcoin reserve, Walgreens goes private in $10B deal, HPE misses revenue estimates, Gap shares spike 17%, Broadcom shares soar 16%
Evelio Silvera
March 07, 2025
Good morning.
⚡ The Fast Five → Trump establishes U.S. strategic bitcoin reserve, Walgreens goes private in $10B deal, HPE misses revenue estimates, Gap shares spike 17%, Broadcom shares soar 16%
🔎 Market Trends → Nasdaq confirms correction amid US trade policy uncertainty; US Futures Rise Ahead of Key Jobs Report
And now…
⏱️ Your 5-minute briefing for Friday, March 7, 2025:
MARKET BRIEF
Before the Open
As of market close 03/06/2025.
Pre-Market
| 
|
Fear & Greed
Markets in Review
Markets Slide as Tariffs Cloud the Outlook, Jobs Data Looms
The Nasdaq dropped 2.6% to 18,069.3, while the S&P 500 fell 1.8% to 5,738.5. The Dow lost 1% to 42,579.1, as consumer discretionary stocks led the decline. Energy was the lone sector in the green.
The Big Picture:
Trade tensions tightened their grip on markets as the White House issued temporary tariff exemptions for Canadian and Mexican goods that meet North American trade pact requirements. But with China and Canada rolling out retaliatory measures, global trade uncertainty remains high.
Meanwhile, the US trade deficit surged 34% in January, reflecting an import-driven expansion. Despite this, the labor market remains steady but under pressure, with job cuts reaching their highest level since July 2020. The February jobs report, due Friday, is expected to show a 160,000-job gain, a pickup from January’s 143,000.
The 10-year Treasury yield rose 1.5 basis points to 4.28%, while the 2-year yield dipped 1.7 basis points to 3.97%. West Texas Intermediate crude oil edged down 0.1% to $66.26 a barrel.
Market Movers:
MongoDB (MDB) plunged 27%, the worst S&P 500 performer, after issuing a downbeat full-year financial outlook despite solid revenue growth.
Netflix (NFLX) fell 8.5%, hit by renewed competition concerns as media streamers continue battling for subscriber growth.
Burlington Stores (BURL) surged 8.7%, leading the S&P 500, as economic uncertainty boosted demand for off-price retail.
Kroger (KR) rose 2%, after beating earnings estimates, though its revenue and full-year outlook came in light.
What They’re Saying:
"Despite fears of trade wars and policy shifts, recent labor data doesn't point to a broad market breakdown," said Jefferies analysts, noting no signs of a major slowdown.
WHAT WE’RE WATCHING
Events
Today: Bureau of Labor Statistics - Average Hourly Earnings m/m - 8:30am
Why You Should Care: It's a leading indicator of consumer inflation - when businesses pay more for labor the higher costs are usually passed on to the consumer.
Today: Bureau of Labor Statistics - Non-Farm Payrolls - 8:30am
Why You Should Care: Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.
Today: Bureau of Labor Statistics - Jobless Rate - 8:30am
Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.
Today: Federal Reserve - Fed Chair Powell Speaks - 12:30am
Why You Should Care: As head of the central bank, which controls short term interest rates, he has more influence over the nation's currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.
Earnings Reports
Today: Genesco, Algonquin Power & Utilities, WeRide, Galiano Gold
Monday: Oracle, BioNTech, Vail Resorts, Asana Mission Produce, Franco-Nevada, Uranium Energy Corp.
MARKET BRIEF
Leading News
Broadcom's AI Chip Bonanza: The Unsung Hero of Wall Street's Tech Rally
Photo Credit: Reuters
Why it matters:
As the AI arms race intensifies, Broadcom (AVGO) has quietly positioned itself as the picks-and-shovels supplier to tech giants — delivering a 25% revenue surge that defies the broader semiconductor slump.
Zoom Out:
The semiconductor veteran stunned Wall Street with first-quarter earnings that trounced expectations, reporting $14.92 billion in revenue against the anticipated $14.61 billion. But more telling was the company's AI chip division, which generated a staggering $4.1 billion — representing 77% year-over-year growth.
While tech investors have fixated on Nvidia's meteoric rise, Broadcom has been methodically building its AI infrastructure business, working both on Google's custom chips and providing crucial networking components that stitch together thousands of processors powering today's generative AI systems.
Key Insights:
The hyperscaler gambit: CEO Hock Tan revealed partnerships with three major cloud providers for custom AI chips, with two more "deeply engaged" and four additional potential customers in the pipeline — but pointedly notes they "don't do it for startups."
Software's quiet contribution: Often overlooked is Broadcom's infrastructure software division, bolstered by the VMware acquisition, which saw a 47% revenue jump to $6.7 billion — creating a diversified business model less vulnerable to semiconductor cycles.
The tariff question: Despite 2025's 23% stock pullback amid concerns over President Trump's trade policies, management's confident guidance of $14.9 billion for Q2 suggests minimal impact on its specialized AI business.
Market Pulse:
"While everyone's chasing the flashy AI names, Broadcom represents the backbone infrastructure play that doesn't depend on a single company's success," notes veteran semiconductor analyst Sarah Chen.
Bull’s Take:
Broadcom's unheralded AI infrastructure play represents the semiconductor equivalent of selling premium tools during a gold rush — less glamorous than mining, but potentially more profitable. With demand for custom AI chips projected to reach $4.4 billion next quarter alone, smart investors should consider looking beyond the usual AI darlings toward the companies building the critical foundation that makes the entire ecosystem possible.
Headlines
Thousands of Nvidia (NVDA) Microchips to Be Used in New Oracle and OpenAI Data Center (link)
BJ's Stock Hits All-Time High as Wholesale Club Tops Estimates, Plans Expansion (link)
HPE expects tariffs to bite, forecasts quarterly revenue below estimates (link)
Walgreens to be taken private by Sycamore in $10 billion deal (link)
Siemens announces $285 million investment in US manufacturing (link)
Gap shares surge on fourth quarter estimates, signals it could beat Trump tariffs (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
*Hat-tip to creaturefind