Finance
Verizon Shares Take a Hit After Q1 Sales Warning
March 13, 2025
The Nasdaq Composite Index is now down 10% from its December peak, as a combination of tariffs and geopolitical tensions has sparked a sell-off, particularly impacting high-flying tech stocks.
Flashback nearly 25 years to March 10, 2000, when the Nasdaq hit its peak at 5048.62. Just days later, the index slipped 2.8%, a small shift that marked the beginning of a much larger downturn. What followed was the bursting of the dot-com bubble, which turned the soaring optimism of web 1.0 entrepreneurs into harsh losses. By the time the dust settled, the Nasdaq had plunged 78% from its peak, and it took 15 years to fully recover.
Fast forward to today, and the Nasdaq is once again facing a correction. As of this week, it’s down 10.4% from its December 16 high, weighed down by ongoing concerns around tariffs, trade, and geopolitical risks. In contrast, broader indexes like the S&P 500, which is off 6.6% from its peak, haven’t yet entered correction territory.
While it’s easy to draw parallels to 2000, it’s important to remember that market pullbacks are a normal part of the cycle. A 10% drop is not uncommon, and history shows that stocks can’t climb indefinitely. That said, unlike during the dot-com era, many of today’s tech giants are showing solid business fundamentals. Take Broadcom (AVGO), for example, which reported a stunning $5.5 billion in Q1 profits, more than quadrupling its earnings from the same period last year.
That being said, history also suggests that if the market enters a prolonged downturn, tech stocks with lofty valuations could face more pain. But it’s worth noting that, unlike the dot-com darlings like Pets.com, or even once-dominant names like Cisco, today’s tech leaders are generating real, sustainable profits.
Broadcom (AVGO) surged 6.78% to $191.61 after reporting better-than-expected earnings and a promising revenue forecast, sending shares soaring in after-hours trading.
For Q1, the chipmaker posted earnings per share of $1.60, surpassing analysts' expectations by $0.10, and delivered an impressive adjusted gross margin of 79.1%—a notable win compared to Nvidia’s recent softness in this area.
A standout performer in Broadcom’s results was AI sales, which hit $4.1 billion, outpacing the consensus estimate of $3.73 billion by nearly 10%.
CEO Hock Tan commented, “We anticipate continued strength in AI semiconductor revenue, forecasting $4.4 billion for Q2, as hyperscale partners keep investing in AI XPUs and connectivity solutions for data centers.”
But it’s Broadcom’s upbeat second-quarter guidance that has investors excited. The company expects to generate approximately $14.9 billion in revenue, beating the consensus estimate of $14.6 billion. Adjusted EBITDA is expected to reach around $9.93 billion, $200 million higher than Wall Street’s forecast.
Shares had taken a hit earlier in the week, following Marvell Technologies’ underwhelming guidance. However, Broadcom’s strong performance has reignited confidence, marking a rare, positive reaction to semiconductor earnings.
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Costco (COST) saw its stock dip 6.13% to $963.20 in after-hours trading on Thursday, after the retailer missed quarterly profit estimates but exceeded sales expectations.
For the quarter ending in mid-February, Costco reported adjusted earnings per share of $4.02, falling short of the $4.09 analysts had forecast. However, the company outperformed on sales, generating $63.7 billion, above the $63.1 billion anticipated by Wall Street. Costco also saw a positive surprise in same-store sales.
While Costco faced some profit pressure, it’s worth noting that other retailers, such as Target (TGT) and Best Buy (BBY), have recently cautioned investors about the potential impact of tariffs on their earnings in future quarters.
Hewlett Packard Enterprise (HPE) saw its stock tumble over 17% in after-hours trading on Thursday following a mixed earnings report and a downbeat forecast for the upcoming quarter and full year.
The data center equipment provider posted $7.85 billion in first-quarter revenue, marking a 17% year-over-year increase on a constant currency basis, slightly beating Wall Street's expectations of $7.81 billion. Adjusted earnings per share came in at $0.49, roughly in line with analysts' forecast of $0.50.
However, the company’s outlook was far from encouraging. For the second quarter, HPE expects adjusted earnings between $0.28 and $0.34 per share, falling well below the consensus estimate of $0.48. Revenue projections for the quarter are between $7.2 billion and $7.6 billion, below the $7.94 billion forecast. For the full year, HPE anticipates adjusted earnings per share between $1.70 and $1.90, lower than analysts’ expectations of $2.12, with expected revenue growth of 7% to 11%, which is in line with analyst estimates.
CEO Antonio Neri acknowledged that the company "could have executed better in some areas," particularly within its server segment. While the server business saw impressive 29% revenue growth, its operating margins narrowed significantly, dropping from 11.4% to 8.1%. The company's overall adjusted gross profit margin also contracted, falling to 29.4% from 36.2% a year ago.
In response to these challenges, HPE announced a cost reduction program aimed at slashing structural operating costs and driving profit growth. This initiative will include workforce reductions through 2026, with expected savings of $350 million by fiscal year 2027.
The company’s stock has faced pressure in recent months, falling approximately 26% since reaching an all-time high in January. This decline has been partly fueled by an ongoing antitrust lawsuit from the U.S. Justice Department, which has raised concerns over HPE’s $14 billion acquisition of Juniper Networks. The DOJ argues that the deal could significantly reduce competition in the enterprise wireless equipment market, leaving just two major players, HPE and Cisco, controlling 70% of the market share.
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