Don’t be fooled by the 15% drop in Broadcom’s earnings on Thursday, says Jim Cramer. “You want to own it,” Jim said on Thursday’s “Squawk on the Street” show. “Every time there’s a big drop like this in stock prices, you have to buy.” However, Jim advised investors to wait a day or two to clear out all sellers and give the stock a chance to stabilize. Broadcom has turned heads, rising more than 19% year-to-date and hitting a new high of about $481 at Tuesday’s close. This kind of setup leaves little room for adjustment. The company needed to do more than just win and raise its stock price to rise. But while the earnings report was strong, it wasn’t enough to excite investors who were hoping management would raise AI’s earnings outlook and not just repeat it. In the quarter, released after the bell Wednesday, Broadcom reported record AI semiconductor sales of $10.8 billion. This is up 143% year-over-year and significantly exceeds guidance. Broadcom expects its AI semiconductor sales to reach $56 billion in fiscal year 2026, an increase of approximately 180% from fiscal year 2025. “We expect this momentum to continue through fiscal year 2027, and we reiterate our outlook for AI semiconductor sales to exceed $100 billion,” Broadcom CEO Hock Tan said on an earnings call. Tan added that AI semiconductor strength should continue into FY2028 thanks to six core customers, including recently expanded partnerships with Google, Anthropic and Meta. Despite Broadcom’s reaffirmation of growing demand, Macquarie analysts on Thursday downgraded Broadcom’s shares to a hold-equivalent rating and lowered their price target from $513 to $437. Analysts predict that Broadcom’s custom silicon revenue will peak in 2027 as Google diversifies beyond its sole custom chip partner. However, JPMorgan raised its price target to $580 from $500 and reiterated its buy rating, noting that Broadcom’s growing customer base will drive AI revenue growth over the next few years, which will exceed current expectations. BofA Securities, Raymond James, and KeyBank also raised their price targets. As expectations grew for Broadcom ahead of earnings, the company cut its position on Tuesday and sold it for about $480 per share, taking a profit. Jim is now looking at opportunities to get some shares back, especially if the stock trades even lower than current levels. “I sold Broadcom. I’d like to buy it back.” (Jim Cramer’s charitable trust is long AVGO. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you’ll receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
