Dj Broadcom Stock Is Having A Big Year. Here Are Some Of The Highlights. - Barrons.Com

Mackenzie Tatananni

Broadcom may have had a volatile year, but the stock was rising on investor enthusiasm Tuesday as it headed for its best year on record.

The California-based tech company is known for making application-specific integrated circuits, or ASICs. Broadcom's customers use these specially designed chips to power artificial intelligence.

While the company has piqued investor interest as a semiconductor manufacturer, it is not purely an AI play. Broadcom also produces enterprise software and security solutions. The company operates through its Semiconductor Solutions and Infrastructure Software arms.

Broadcom has been on the receiving end of good news as of late. UBS analyst Timothy Arcuri raised his price target on Broadcom stock to $270 from $220 on Monday and kept an Overweight rating.

Arcuri's not the only observer upbeat on the stock. On Friday, Morgan Stanley analyst Joseph Moore included Broadcom in his list of favorite ideas for 2025. Moore had encouraged investors to "maintain high exposure to AI and data center names."

Shares of Broadcom rose 3.2% to $239.68 on Thursday. The stock has more than doubled in price this year, and is on pace for its best year on record, according to Dow Jones Market Data.

It wasn't always a smooth ascent. Shares of the chip maker were volatile early in 2024, tumbling in March fell after an earnings failed to excite investors, despite beating estimates. But Broadcom stock went on to rally to a record intraday high in June after the company posted even stronger earnings, and declared a 10-for-1 stock split effective July 15. Then in August, the stock slumped as part of a sector-wide selloff ahead of Nvidia earnings.

On Dec. 12, Broadcom reported strong fiscal-fourth-quarter earnings and provided strong guidance.

The company joined the $1 trillion club when its market capitalization topped that on Dec. 13. It is the eighth largest public company by market cap in the U.S. and the ninth in the world, according to Dow Jones Market Data.

Broadcom shareholders are getting a New Year's gift in the form of an increased dividend. The company is paying a quarterly dividend of 59 cents per share, an 11% hike from the last dividend of 53 cents, on Dec. 31.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

The S&P 500 Index on Tuesday closed up +1.10%, the Dow Jones Industrials Index closed up +0.91%, and the Nasdaq 100 Index closed up +1.37%. March E-mini S&P futures (ESH25) rose +1.04%, and March E-mini Nasdaq futures (NQH25) rose +1.35%. The NYSE and Nasdaq on Tuesday closed early at 1PM Eastern time for the Christmas Eve holiday.

Stocks on Tuesday continued to rally due to strength in chip and tech stocks. Chip stocks saw continued strength after the Biden administration on Monday announced a trade investigation of Chinese chips, which may pave the way for the incoming Trump administration to slap tariffs on Chinese chips, thus providing trade protection for US chip makers.

China may sell a record 3 trillion yuan ($411 billion) of special Treasury bonds in 2025 to bolster economic stimulus for its economy, according to a report Tuesday by Reuters. That would be sharply higher from 1 trillion yuan of bonds sold this year. The news that China may boost its economic stimulus measures was supportive of global stocks.

Stocks were undercut by Tuesday's small +0.2 bp rise in the 10-year T-note yield, which added to Monday's large gain of +6.4 bp.

The Philadelphia Fed's Dec non-manufacturing activity index fell by -0.1 point to -6.0 from -5.9 in November, weaker than expectations for an increase to -2.4.

The Richmond Fed's Dec manufacturing index rose +4 points to -10 from November's -14, which was in line with market expectations.

The markets are discounting the chances at 9% for a -25 bp rate cut at the January 28-29 FOMC meeting.

Overseas stock markets on Tuesday were mixed. The Euro Stoxx 50 on Tuesday closed up +0.10%, snapping a 3-session losing streak. China's Shanghai Composite Index closed up +1.26%, also snapping a 3-session losing streak. Japan's Nikkei Stock 225 closed down -0.32%, giving back part of Monday's +1.19% rally.

Interest Rates

March 10-year T-notes (ZNH25) on Tuesday edged to a new 7-month low but then recovered and ended the day up +1.5 ticks. The 10-year T-note yield rose +0.2 bp to 4.589%, and edged to a new 7-month high. T-note prices early Tuesday saw continued weakness after Congress last Friday averted a US government shutdown that would have been negative for the US economy. T-note prices were also undercut by supply overhang as the Treasury on Tuesday sold $70 billion of 5-year T-notes. The Treasury will sell $44 billion of 7-year T-notes on Thursday. T-notes found some support Tuesday from the weak Philadelphia Fed report.

The German markets were closed Tuesday. The 10-year German bund yield on Monday rose +3.8 bp to 2.323%. The 10-year UK gilt yield Tuesday rose +2.9 bp to 4.575%.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its January 30 policy meeting and at 8% for a -50 bp rate cut at that meeting.

US Stock Movers

The Magnificent 7 stocks showed strength, led by Tesla , with a gain of more than +7%. Amazon , Meta Platforms , and Apple showed gains of more than +1%.

Chip stocks were leaders in the Nasdaq 100 index again Tuesday. Arm Holdings and Broadcom showed gains of more than +3%. Marvel Technology , ON Semiconductor , Analog Devices , GlobalFoundries , Advanced Micro Devices , Texas Instruments , and Microchip Technology all showed gains of more than +1%.

Crypto-stocks rallied due to Tuesday's rally of more than +5% in bitcoin rallied more than +7% and topped the Nasdaq 100 leaderboard. Riot Platforms rose +8%, and Coinbase rose more than +4%.

American Airlines rose +0.57%, more than recovering its losses of more than -5% in pre-opening trading. American Airlines early Tuesday morning grounded all its flights nationwide for about an hour due to a software glitch. The ground halt was lifted at about 7 AM Eastern time.

Starbucks rallied +2.81% even as its workers union said that a barista strike would spread to more than 300 cafes.

Earnings Reports (12/26/2024)

Alumis Inc (ALMS).

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.

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