Broadcom $AVGO continues to reinforce its place among the market’s top compounders.
The $1.1T semiconductor and infrastructure software giant just posted another double beat.
Despite the beat, the stock traded down 5% in reaction to the news, showing that expectations were high heading into the event.
But context matters.
Zooming out, the stock has been rewarded for 17 of its last 22 earnings reports. That kind of consistency is rare, especially at this scale.
What makes the company's story so compelling is its multi-engine business model.
On one side, it powers global connectivity with networking chips, broadband, and custom silicon. In addition, they provide critical infrastructure for cloud, telecom, and AI data centers.
On the other hand, it offers a high-margin software platform anchored by the VMware acquisition, generating sticky recurring revenue across enterprise systems.
This blend of hardware scale and software stability has helped them become one of the most reliable long-term performers in the market.
The recent pullback may have caught attention, but the bigger story remains intact...
Broadcom continues to be one of the greatest compounders in the market.
So what else did we learn from Friday's earnings reactions? Let’s dive into the details.
Here are the latest earnings stats from the S&P 500 👇
*Click the image to enlarge it
Broadcom $AVGO had the best reaction score after reporting a double beat.
The company reported revenues of $15B, versus the expected $14.96B, and earnings per share of $1.58, versus the expected $1.57.
Lululemon $LULU had the worst reaction score after reporting a double beat.
The company reported revenues of $2.37B, versus the expected $2.36B, and earnings per share of $2.60, versus the expected $2.58.
Now let's dive into the data and talk about what happened with these reports 👇
AVGO has been rewarded for 17 of its last 22 earnings reports:
Broadcom fell 5% after this earnings report, and here's why:
Non-AI semiconductor revenue is weak, declining 5% year-over-year.
Cash flow as a percentage of revenue remains pressured by higher interest expenses and taxes related to the VMware acquisition.
The management team guided for a decline in consolidated gross margin of around 130 basis points for Q3, primarily due to a higher mix of lower-margin custom XPUs within AI revenue.
This company remains a powerhouse in Technology, and that’s not likely to change anytime soon.
While this quarter’s earnings reaction was negative, the bigger picture tells a different story.
The stock is pressing into new all-time highs and appears well-positioned to push toward the next major Fibonacci extension level.
The short-term reaction doesn’t alter the long-term trend. This uptrend is very much intact.
If AVGO is above 210, the path of least resistance will likely remain higher for the foreseeable future.
LULU had its worst earnings reaction since 2017:
Lululemon fell 19.8% after this earnings report, and here's why:
Q2 operating margin is expected to decrease by approximately 380 basis points year-over-year
Inventory increased 23% year-over-year in dollar terms (16% in units), with management attributing much of the dollar inflation to tariffs and FX.
The management team highlighted margin pressure and inventory markdowns as the most significant risks for the company this year.
This is one of the most iconic names in apparel retail, but it’s facing serious near-term challenges.
The market just delivered its harshest verdict since 2017, with the worst earnings reaction in nearly a decade.
Adding to the concern, the stock has carved out a textbook multi-year distribution pattern. The lower boundary aligns perfectly with the 61.8% retracement of the prior uptrend.
Unless something changes fast, it’s only a matter of time before that support level gives way and the next leg lower begins.
If LULU is below 226, the path of least resistance will shift from sideways to lower for the foreseeable future.
Thank you for reading.
- The Beat Report Team
P.S.: The commodities markets are moving fast.
Gold is making new all-time highs.
Silver is at its highest level since 2012.
What's next?
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They broke down all of the key levels in commodities and where the next big trend will be. Click here to watch the video.
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