Broadcom’s gain is Nvidia’s pain

A supply-constrained AI boom is looking for answers, and not all of those might come from the $3 trillion juggernaut.

12/13/24 2:24PM

Chip company Broadcom’s 20% gain and entrance into the trillion-dollar-market-cap club is propelling the VanEck Semiconductor ETF up about 2% on Friday.

But that rising tide isn’t lifting the boat of industry titan Nvidia, which was down over 2% as of 2:20 p.m. ET on Friday.

Right now, the AI boom still looks supply-constrained. Microsoft can’t scale up its capabilities fast enough because of a lack of data centers — even as the US has more of these than most other countries combined. And Nvidia’s saying demand for its new chip will exceed supply for the foreseeable future.

Companies are feverishly working to muscle in on Nvidia’s turf — in addition to Broadcom, the likes of Amazon and Apple are at it (the latter with help from Broadcom!) — and the more success they have, the more that AI demand might be satisfied by Nvidia’s competitors.

Zooming out... Nvidia is still far and away the best-performing chip stock this year. And with those great gains come greater expectations, which become increasingly difficult to meet.

We warned that the magnitude of Nvidia’s hot run into its latest earnings report raised the risk that gains were being pulled forward, and an underperformance versus its peers could be looming thereafter.

And... yeah that’s pretty much what’s happened:

Luke Kawa

11h

Qualcomm spikes despite poor forecast, citing progress with “leading hyperscaler” and an imminent return to growth in China

Qualcomm, a chip company seemingly left behind in AI, is trying to lean in more to the boom.

A crowd of visitors at the Qualcomm ( Qualcomm is an...

Max Knoblauch12h

Ford raises its full-year guidance, receives $1.3 billion tariff refund

Ford reported its first-quarter results after markets closed on Wednesday. The automaker’s shares climbed roughly 7% in after-hours trading on the news.

For Q1, Ford reported:

Adjusted earnings of $0.66 per share, compared to the $0.18 per share expected by Wall Street analysts polled by FactSet. The figure includes Ford’s tariff reimbursement.
$43.25 in total revenue, vs. the $42.66 billion consensus forecast. Automotive revenue came in at $39.8 billion, compared to estimates of $38.9 billion.
A $1.3 billion tariff refund.

Ford boosted its full-year guidance for adjusted earnings before interest and taxes to between $8.5 billion and $10.5 billion, up from between $8 billion and $10 billion.

Late last year, Ford announced it would take $19.5 billion in charges — one of the largest write-downs ever — relating mostly to its EV business. Of those charges, $7 billion will be spread across this year and next, the company said.

Earlier this month, Ford recorded an 8.8% drop in Q1 sales from the same period last year, a similar result to Detroit rival GM, which posted a 9.7% sales drop.

Jon Keegan12h

Microsoft beats on revenue and earnings in Q3, but only meets expectations for cloud growth

Microsoft shares dipped after the company reported strong Q3 earnings postmarket Wednesday, posting sales of $82.9 billion for the quarter, beating FactSet analyst estimates of $81.4 billion. Earnings per share were $4.27, handily beating estimates of $4.05.

In a closely watched number, Microsoft’s Azure cloud business increased 40% year on year, just above the 39.7% estimated. The metric technically beat expectations, but may not be the beat investors were looking for.

Total capital expenditure for the quarter was $31.9 billion, up 49% year on year, above estimates of $27.5 billion and down from Q2’s $37.5 billion.

One thing investors were eager to find out: how is the company doing in its effort to fulfill the billions in backlogged commercial bookings? Last quarter, the company reported a staggering $625 billion in remaining performance obligations, and 45% of that was for just one customer — OpenAI.

For the third quarter, Microsoft reported a backlog of $627 billion, up 99% year on year. The company said the RPO increase was 26% — in line with “historical seasonality” — when excluding OpenAI.

Breaking down the results by the company’s business lines:

☁️ 🤖 Intelligent Cloud (Azure, server products): $34.7 billion in revenue, up 30% year on year.
📝 📊 Productivity and Business Processes (Microsoft 365, LinkedIn, Dynamics): $35 billion in revenue, up 17% year on year.
💻 🎮 More Personal Computing (Windows, Xbox, Bing): $13.2 billion in revenue, down 1% year on year.

Microsoft CFO Amy Hood said in the earnings release:

“We delivered results that exceeded expectations across revenue, operating income, and earnings per share, reflecting strong execution and growing demand for the Microsoft Cloud.”

Max Knoblauch

12h

Carvana reports better-than-expected Q1 sales, gross profit per vehicle

Carvana reported its first-quarter earnings after markets closed on Wednesday.