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Sherwood Staff11/14/24

Broadcom slumps for fifth straight day

Excitement over the chipmaker — which, like Nvidia, provides chips used for AI applications — has seemed to stall since Broadcom reported earnings in September that had the company posting a surprise $1.88 billion loss.

At the time, The Wall Street Journal spotlighted a potential weakness: its fast-growing AI business is incredibly concentrated among tech giants like Meta, Google parent Alphabet, and TikTok parent ByteDance, whose demand for chips can be “lumpy,” according to Broadcom boss Hock Tan. That lumpiness may have contributed to the somewhat weak sales forecast the company offered.

Broadcom is down more than 7% this week, compared to a decline of 0.8% for the S&P 500 and SOX that is essentially flat. That said, Broadcom is up 53% this year.

Heard on the Street: Broadcom Takes Its AI Lumps

Heard on the Street: Broadcom Takes Its AI Lumps

At the time, The Wall Street Journal spotlighted a potential weakness: its fast-growing AI business is incredibly concentrated among tech giants like Meta, Google parent Alphabet, and TikTok parent ByteDance, whose demand for chips can be “lumpy,” according to Broadcom boss Hock Tan. That lumpiness may have contributed to the somewhat weak sales forecast the company offered.

Broadcom is down more than 7% this week, compared to a decline of 0.8% for the S&P 500 and SOX that is essentially flat. That said, Broadcom is up 53% this year.

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Max Knoblauch4h

US airlines pop on report Spirit preparing to shut down as government rescue deal fails to gain support

US airlines are spiking on Friday following a Wall Street Journal report that low-budget carrier Spirit Airlines is preparing to shut down. According to CBS News, the airline could cease operations as early as Saturday, barring an intervention.

In late April, President Trump said he would “love somebody to buy Spirit.” The administration weighed a $500 million rescue package, though it received significant blowback from members of Congress and ultimately didn’t receive support from Spirit’s creditors.

On Friday, Trump told reporters that the administration has given Spirit a “final proposal.”

Shares of Spirit’s rivals surged on the report, with budget carriers like Frontier Airlines and JetBlue climbing by double digits. The big four — Delta Air Lines, United Airlines, American Airlines, and Southwest Airlines — rose by low single digits. Alaska Air and Allegiant also saw a bump.

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Estée Lauder gets a glow-up after earnings beat, guidance hike

Estée Lauder shares are soaring after the beauty giant released Q3 earnings results that topped expectations and raised its full-year outlook, while also expanding its restructuring plan.

The key numbers:

Revenue of $3.71 billion (compared to analysts’ estimate of $3.69 billion).
Adjusted earnings per share of $0.91 (estimate: $0.65).

Estée Lauder also lifted its full-year earnings outlook to a range of $2.35 to $2.45 per share, up from $2.05 to $2.25 previously.

The bottom line is getting flattered by job cuts, with management increasing that target to as many as 10,000 roles, up from a prior range of 5,800 to 7,000, as part of a broader effort to streamline operations and shift toward faster-growing sales channels.

The rally comes after a tough stretch for the stock, which is down more than 20% year to date, with the results inspiring hope that its turnaround efforts will bear fruit.

CEO Stéphane de La Faverie said fiscal 2026 is “promising to be the pivotal year we intended,” with the company expecting to restore organic sales growth and expand margins for the first time in four years.

Amid these positive signals, Estée Lauder flagged risks from tariffs, geopolitical tensions, and potential disruptions tied to the Middle East.

FLASHBACK

Stocks like Dell, Intel, Sandisk, Western Digital, and Cisco are on fire.

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J. Edward Moreno8h

Moderna beats Q1 estimates and reaffirms full-year guidance

Moderna rose in premarket trading after it reported earnings results that beat Wall Street expectations and reaffirmed its full-year guidance.

For the first three months of 2026, the company reported:

An adjusted loss per share of $3.40, less than the $4.45 loss per share analysts polled by FactSet had expected.
Revenue of $352 million, more than the $236 million the Street was anticipating. About 80% of that came from outside the US, the company said.

For the full year in 2026, the company still expects:

Revenue to grow 10%. Currently, analysts are penciling in $2 billion in 2026 sales, which is about a 5% increase.

Moderna was tapped by the US government to quickly develop a vaccine for COVID-19 in 2020, a product that has seen its sales plummet, but remains the company’s main source of revenue.

Now, the company sees growth on the horizon this year, after the European Commission approved its combination vaccine for the flu and COVID-19 for adults ‌50 years and older. Indeed, Moderna said a growing share of its revenue is coming from international markets.

The company has had a harder time getting approval from the US Food and Drug Administration, though the agency said in February that it would reconsider its stand-alone flu vaccine.

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Chevron posts mixed Q1 results, as sales miss offsets big earnings beat

Chevron is modestly lower after posting mixed Q1 results, as investors wonder whether elevated oil prices and crack spreads will continue to buoy earnings in the quarters to come.

The key numbers:

Q1 revenue of $48.6 billion (compared to analyst estimates of $50.6 billion).
Adjusted earnings per share of $1.41 (estimate: $0.90).
Production of 3.86 million barrels of oil equivalent per day (estimate: 3.8 million).

The upside surprise in Chevron’s upstream (production) business more than offset underwhelming results in its downstream (refined) division.

Friday’s dip comes with Chevron outperforming most of the Energy Select Sector SPDR Fund as of 10:36 a.m. ET, with tumbling West Texas Intermediate futures weighing on energy stocks.

Chevron said earnings would have been better if not for “unfavorable timing effects” totaling about $2.9 billion, which included mark-to-market losses on derivatives and inventory accounting impacts, weighing on reported earnings.

“Despite heightened geopolitical volatility and related supply disruptions, Chevron delivered solid first-quarter performance,” CEO Mike Wirth said, citing strong US operations and production growth following the integration of Hess.

Ahead of these results, Chevron had also cautioned that supply may take time to respond to higher prices. Wirth also said in a CBS interview that restoring production is “not like turning on a faucet,” noting it can take “weeks and months, in some cases years” to bring disrupted fields and infrastructure back online.

The results also come as Wirth met with President Trump and other energy executives this Tuesday to discuss potential steps to stabilize oil markets in the event that shipments through the Strait of Hormuz remain limited.

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