The work-from-home environment isn’t just boosting cloud software stocks. The trend is one reason for the support seen in semiconductor stocks in 2020, as the broader market has fallen slightly.
Broadcom (AVGO) - Get Broadcom Inc. Report posted a solid quarter Thursday, meeting earnings per share estimates and beating revenue. The stock rose marginally after hours Thursday, but got taken up almost 5% to $324 share Friday, as the broader market ripped higher on a surprise jobs report, showing a net add for May, rather than a large loss. The iShares PHLX Semiconductor etf (SOXX) - Get iShares PHLX Semiconductor ETF Report rose almost 4%.
Broadcom posted revenue of $5.74 billion for the quarter, beating Wall Street estimates of $5.69 billion. Earnings per share on an adjusted basis came in at $5.14, in line wit analysts estimates. Revenue grew 4% year-over-year, while EPS fell 1.3%.
The company guided for a mid range of $5.75 billion in revenue for the current current, with only $150 million plus or minus, a vote of confidence in the company’s forecast.
"Looking ahead, our third quarter guidance for semiconductors reflects a surge in demand from cloud,” CEO Hock Tan said on the earnings print.
Broadcom doesn’t disclose what percent of revenue it derives from cloud-related products, but this has ben a driver of positive revenue and earnings growth for the semiconductor industry this year, in tandem with the demand and supply recovery in China. That’s a tailwind for all product segments and many chip makers derive a lot of revenue from China.
With the S&P 500 down about 1% year-to-date, here are three chip makers highly exposed to cloud and data center growth and how their stocks have performed this year: