Nvidia's Earnings: A Bellwether for Broadcom and Other Chipmakers

Nvidia's quarterly earnings suggest a bullish outlook for AI chipmakers. The company's stock dropped 3% despite beating estimates, while Broadcom, a major AI chipmaker, slipped 1%. Broadcom's revenue is heavily exposed to China, but it also benefits from AI demand from Big Tech clients like Meta and Alphabet. Analysts expect rising sales and profits from Broadcom, with a "buy" rating from all 10 analysts. Oppenheimer predicts Broadcom's stock could climb to $325, still below a Street high of $350.

Nvidia's quarterly earnings report has sparked a bullish outlook for AI chipmakers, with the company's stock dropping 3% despite beating estimates. The data-center revenue, which drives the AI cycle, rose 56% to $41.1 billion, but fell just short of analysts' expectations [1]. Despite this, Nvidia's guidance for the current quarter was $54 billion, a modest beat of Street estimates. The company also announced a $60 billion buyback, signaling confidence in its capital allocation [1].

Broadcom, another major AI chipmaker, saw its stock slip 1% following its earnings report. The company is heavily exposed to China, but it also benefits from AI demand from Big Tech clients like Meta and Alphabet. Broadcom's AI segment drove 46% year-over-year growth in the second quarter, reaching $4.4 billion. The company expects this figure to rise to $5.1 billion in the upcoming report, accounting for approximately one-third of its total revenue [2].

Analysts expect rising sales and profits from Broadcom, with a "buy" rating from all 10 analysts. Oppenheimer predicts Broadcom's stock could climb to $325, still below a Street high of $350 [2]. Despite the cautious guidance for the third quarter, Broadcom's strong free cash flow supports dividends, buybacks, and debt reduction, especially following its $69 billion acquisition of VMWare [2].

The semiconductor sector's forward P/E of 36.04, higher than historical averages, reflects a broader market euphoria that may not be justified by fundamentals. For investors, the calculus hinges on balancing near-term execution risks with long-term AI infrastructure positioning. Broadcom's Q3 earnings on September 4, 2025, will be critical in determining whether the stock can achieve short-term profitability and sustain its growth trajectory [2].

References:
[1] https://www.investing.com/analysis/nvidia-q2-earnings-review-growth-slows-after-two-years-of-ai-boom-200666067
[2] https://www.ainvest.com/news/broadcom-post-earnings-outlook-high-growth-overvalued-ai-sector-2509/