Finance
Verizon Shares Take a Hit After Q1 Sales Warning
March 13, 2025
Bank of America is showing increased confidence in Broadcom (AVGO), raising its price target from $250 to $260 following the chipmaker’s strong earnings report and upbeat guidance. The updated target suggests a potential upside of around 35% from its current price.
In a note to clients, analysts led by Vivek Arya highlighted Broadcom’s earnings outperformance, which they called a refreshing contrast to the more cautious earnings outlooks from other industry players. They raised their earnings per share (EPS) forecasts for this year and the next two, noting that Broadcom's success in securing new hyperscaler customers, along with its expanding market share in customized advanced chips, positions the company well for future growth.
The analysts see a significant long-term opportunity, estimating that customized chips (ASICs) could capture 10-15% of the $400-$500 billion addressable market. Broadcom’s expanding list of hyperscaler customers is helping to fuel this optimism. The company is already working with three custom silicon clients and is in discussions with two additional potential customers, with plans to ship products later this year. In total, Broadcom is engaged with seven hyperscalers—companies with large enough infrastructures to potentially deploy millions of XPU clusters for next-generation AI and data center models.
Broadcom is currently one of Bank of America’s top five semiconductor picks, alongside Nvidia (NVDA), Lam Research, Analog Devices, and Marvell Technology (MRVL). While Marvell also specializes in customized chips, it experienced a sharp decline after releasing lukewarm earnings results earlier this week.
Overall, analysts are largely bullish on Broadcom’s prospects, with an average price target of $253. According to Bloomberg, 90% of analysts covering the stock rate it as a "buy," while the remaining 10% have it as a "hold." Broadcom’s strong position in the hyperscaler market, combined with its strategic customer wins, has many investors optimistic about its future growth potential.
Costco shares are on track for their worst performance in nearly a year, with the stock tumbling over 6% this morning following the company’s disappointing fiscal second-quarter earnings report. Currently priced at $963.20, Costco's stock has dropped by 6.13%, marking a significant dip after investors reacted negatively to the results. If the losses hold, this could be the retailer’s worst day since March 8, 2024, when shares fell by 7.6% after a similar earnings miss for the same quarter.
Despite the recent plunge, Costco's stock has seen impressive growth over the past year. Between the two earnings reports, the company’s shares surged by 41%, a strong performance that highlights the volatility the stock has experienced in recent months.
This year, the earnings miss comes at a particularly challenging time, with broader market uncertainty adding to the pressure. Investors are grappling with fluctuating US tariff discussions on goods from Mexico and Canada, a situation that has raised concerns among retailers. Many have warned that the ongoing trade tensions could negatively impact their financial performance in the months ahead.
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The S&P 500 has recently slipped below its 200-day moving average, signaling a shift in the market’s momentum. While the index managed to close just above this critical technical level on Thursday, a significant portion of its constituent stocks had already fallen below it. This has raised concerns, especially as the broader market continues to show signs of weakness.
As trading resumed on Friday, the S&P 500 dipped once again, breaking its 200-day moving average and reinforcing the bearish sentiment. Among the stocks that have struggled, many of the so-called "Magnificent 7" — including major players like Microsoft, Nvidia, Amazon, Alphabet, and Tesla — are all now trading below this key level. This suggests a broader market correction, as even the top-performing stocks are not immune to the downward pressure.
In addition to these giants, the iShares MSCI USA Momentum Factor ETF (MTUM) is also on the verge of closing below its own 200-day moving average for the first time since 2023. This shift highlights the difficulties faced by high-flying growth stocks, which once commanded premium valuations but are now grappling to maintain support in an increasingly volatile market. As we move forward, investors are keeping a close eye on these technical levels, as they may offer further clues about the market's direction.
Since the U.S. presidential election, the once high-flying "Magnificent 7" stocks have taken a notable downturn. After seeing a strong surge of over 20% in the wake of the election, with impressive gains across the group, the momentum has shifted. While Nvidia saw a slight dip, Tesla stood out with an exceptionally strong performance. However, recent losses have now flipped the script, and the cohort has moved into negative territory, showing a slight decline since November 5.
The downturn in these key stocks highlights a broader breakdown in the momentum trade. Nvidia, in particular, has been the largest drag on the group, significantly weighing down the overall performance. Along with Nvidia, both Microsoft and Amazon have also seen losses since the election, contributing to the shift in sentiment for this previously dominant group of tech stocks.
As momentum continues to falter, investors are watching closely to see if the Magnificent 7 can regain their footing or if this marks the beginning of a more significant trend. The reversal of fortunes for these market leaders is a reminder of how quickly sentiment can shift, especially in a market driven by technical factors and investor psychology.
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