Has Broadcom emerged as NVIDIA's rival? Adobe, which surged 10% due to good financial results, is still lagging behind clearly
US stocks continue to rise。Inflation is slowing、Expectations of interest rate cuts continue、There are three signatures of good performanceit's for. In particular, good performance has dispelled concerns about high valuations.
At your feet3 notable AI-related stocks, a major semiconductor company $Broadcom(AVGO.US$, the software giant's $Adobe(ADBE.US$with $Oracle(ORCL.US$ButAll together is a good settlementannounced.Both stock prices surged 10% or more compared to the previous day。
OfBroadcomisThis year's AI semiconductor sales forecast was revised upward from the previous 10 billion dollars to 11 billion dollarsI did it. There is a possibility that Broadcom has emerged as a rival to NVIDIA, which is leading the way in terms of AI semiconductor sales.Good performanceWith the announcement of the split, it seems that developments that test high stock prices will continueThat's it.AdobeisThe full-year outlook was revised upwardThen, stock prices skyrocketed due to overtime trading on 6/13.It has fallen 23% year to date, and the sense of being late is still clearI can say that.It is expected that review purchases will continueIt will be done.Oraclealso showed strong demand in the AI field on 6/11, and it rose 13% the next day,Update the high price since listingI did it.
●Business content：The two pillars are semiconductor solutions and infrastructure software (including cloud services). VMware, which was acquired in 2022, is responsible for cloud services. The fact that it has two businesses that benefit from the AI boom can be said to be a unique point when compared to other companies in the same industry.
●Key Customers： $Apple(AAPL.US$In addition, we are proceeding with in-house development of custom semiconductors $Alphabet-A(GOOGL.US$Ya $Meta Platforms(META.US$are lined up. In other words, Broadcom $Advanced Micro Devices(AMD.US$Like $NVIDIA(NVDA.US$They are not confronted head-on, but they are NVIDIA's main customersThey make custom semiconductors for hyperscalers. At the financial results briefing on 6/12, the management teamThe ratio of custom AI semiconductors is increasingand explanation. A network operating system is also provided for hyperscalers.
Note, in the table above, US stocks other than hyperscalers, $Dell Technologies(DELL.US$Ya $TD Synnex(SNX.US$、 $Arrow Electronics Inc(ARW.US$Both are IT product manufacturers. Dell has been testing a rebound after the sharp fall, and stock prices of TD Sinex and Arrow Electronics have remained steady.
●Strong performance
・2Q Results: Sales were $12.49 billion, exceeding market expectations of $12.06 billion. Earnings per share were $10.96, which exceeded market expectations of $10.80.Driven by AI demand and VMware。
・2Q Results: Sales were $12.49 billion, exceeding market expectations of $12.06 billion. Earnings per share were $10.96, which exceeded market expectations of $10.80.Driven by AI demand and VMware。
・Full year outlook: Sales were 51 billion dollars, which exceeded market expectations of 50.58 billion dollars.Sales of AI-related semiconductors reflect strong demand, and the forecast was revised upward from the previous 10 billion dollars to 11 billion dollars. At the financial results briefing, an analyst asked why it is 11 billion dollars, thinking that the current situation is expected to be 11.6 billion dollars. The management team answered, “Your predictions may be more correct than mine.” It suggested the possibility of an upward move.
● Stock split announced
Similar to NVIDIA, Broadcom had good financial resultsStock split announced (10 shares per share will be split on 7/15)。In the case of NVIDIA, it is expected that there is a possibility that stock prices will continue until the split is implemented.
Similar to NVIDIA, Broadcom had good financial resultsStock split announced (10 shares per share will be split on 7/15)。In the case of NVIDIA, it is expected that there is a possibility that stock prices will continue until the split is implemented.
Note that in the US market on 6/13 $Super Micro Computer(SMCI.US$It also rose 12%. In response to good financial results from Broadcom, Supermicro, which also handles AI hardware, was reviewed and purchased. At the same time, Supermicro will follow NVIDIA and Broadcom, and views have surfaced that there is a possibility that a stock split will be announced. The company is launching a liquid-cooled AI data center that is optimized for AI enterprise software and can be deployed immediately. Since mid-March, the company's stock has been weak due to profit-taking sales, but reviews and purchases may continue against the backdrop of new products and split expectations.
●Analyst evaluations and target stock prices
High ratings and increases in target stock prices stand out
・Barclays: (Investment Decision: Overweight,Target stock price: 1500 dollars ⇒ 2000 dollars）
Broadcom raised guidance for the full year 24 due to the acceleration of the launch of AI (related products/services). Also, we are continuing to efficiently integrate VMware.” It's going to continue to be one of the best ways to play AI.”
High ratings and increases in target stock prices stand out
・Barclays: (Investment Decision: Overweight,Target stock price: 1500 dollars ⇒ 2000 dollars）
Broadcom raised guidance for the full year 24 due to the acceleration of the launch of AI (related products/services). Also, we are continuing to efficiently integrate VMware.” It's going to continue to be one of the best ways to play AI.”
・Piper Sandler (Investment Decision: Overweight,Target stock price 1650 dollars ⇒ 2000 dollars）
Performance exceeded expectations due to custom AI accelerators and VMware. There is still room for growth in VMware integration.
Performance exceeded expectations due to custom AI accelerators and VMware. There is still room for growth in VMware integration.
・Bloomberg Intelligence:The fact that 2Q sales exceeded market expectations indicates strong performance in the AI infrastructure business. VMware's timely integration has also made up for the slump in other semiconductor segments.
・Truist Security (investment decision: buy,Target share price: $1566）
Sales of AI products were 3.1 billion dollars, which greatly exceeded the forecast of 2.4 billion dollars, which suggests weakness in other fields. However, the earnings forecast will be raised slightly.
Sales of AI products were 3.1 billion dollars, which greatly exceeded the forecast of 2.4 billion dollars, which suggests weakness in other fields. However, the earnings forecast will be raised slightly.
・Evercore ISI (Investment Decision: Outperform,Target share price: $1620）
It exceeded expectations in both the semiconductor solutions and infrastructure software segments. Earnings forecasts have been raised.
It exceeded expectations in both the semiconductor solutions and infrastructure software segments. Earnings forecasts have been raised.
●Business description：software company. A company known for creating and editing PDFs. In the main Document Cloud division, PDF has become a global standard for automating business and consumer workflows, and Acrobat is an ideal platform for displaying, editing, and sharing documents. The number of monthly active users of Document Cloud is steadily increasing.
●New acquisitions and monetization are being strengthened by introducing AI: We are introducing AI functions into almost all products and services, and we are strengthening new acquisitions and monetization through this. There were also skeptical views about the results, but the details of the financial results on 6/13 seem to have dispelled those concerns. The management team stated that efforts to incorporate AI functions into their products are gathering support among customers. In the future, it was decided that “we will focus on changing the AI pipeline to monetization.”It is thought that there is a possibility that the monetization of AI products and services will advance further。
●As for financial results, the full-year upward revision is a good source
・2Q Results: Sales reached a record high of 5.31 billion dollars, exceeding market expectations of 5.29 billion dollars. The adjusted profit per share was 4.48 dollars, which exceeded the market forecast of 4.40 dollars.
・3Q forecast: Sales were 5.33 billion dollars to 5.38 billion dollars, which was slightly lower than the market forecast of 5.4 billion dollars.
・Full year sales forecast: It was revised upward from the previous 21.3 billion dollars to 21.5 billion dollars to 21.4 billion dollars to 21.5 billion dollars. The adjusted profit per share was 4.50 dollars to 4.55 dollars, which exceeded the market forecast of 4.48 dollars.
・2Q Results: Sales reached a record high of 5.31 billion dollars, exceeding market expectations of 5.29 billion dollars. The adjusted profit per share was 4.48 dollars, which exceeded the market forecast of 4.40 dollars.
・3Q forecast: Sales were 5.33 billion dollars to 5.38 billion dollars, which was slightly lower than the market forecast of 5.4 billion dollars.
・Full year sales forecast: It was revised upward from the previous 21.3 billion dollars to 21.5 billion dollars to 21.4 billion dollars to 21.5 billion dollars. The adjusted profit per share was 4.50 dollars to 4.55 dollars, which exceeded the market forecast of 4.48 dollars.
●Analyst evaluations and target stock prices
positiveEvaluations and target stock price increases stand out
・Evercore ISI (investment decision outperform, target share price 650 dollars)
Considering ongoing discussions among investors, it is important that Adobe revised its full-year sales forecast upward. Also, since the headwind of pricing in the Creative Cloud division changed to neutral/tailwind in the second half, it is expected that strong growth will continue in the second half of the year.
positiveEvaluations and target stock price increases stand out
・Evercore ISI (investment decision outperform, target share price 650 dollars)
Considering ongoing discussions among investors, it is important that Adobe revised its full-year sales forecast upward. Also, since the headwind of pricing in the Creative Cloud division changed to neutral/tailwind in the second half, it is expected that strong growth will continue in the second half of the year.
・RBC Capital Markets (investment decision: outperform, target share price 600 dollars)
It's a strong settlement. The AI approach was supported by both new and existing customers, and showed strong growth across Creative Cloud, Document Cloud, and Experience Cloud.
It's a strong settlement. The AI approach was supported by both new and existing customers, and showed strong growth across Creative Cloud, Document Cloud, and Experience Cloud.
・Third bridge: The 2Q results that exceeded expectations and the full-year guidance increase elicited enthusiastic expectations from investors that monetization of the company's AI tools would soon be realized.
Created 6/14/24 Market Analyst Amelia
Source: Company materials and created by MooMoo Securities from Bloomberg
Source: Company materials and created by MooMoo Securities from Bloomberg
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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