Broadcom $AVGO just reported another blockbuster earnings report, and the market loved it.
It wasn't anywhere near as positive as last quarter's reaction. Q4 2024 was the best earnings reaction ever, leading to the stock joining the 1 trillion dollar market capitalization club.
Nonetheless, this was a very positive development for the Semiconductor industry, which has sucked recently.
We've been talking about these stocks nonstop around here, and it's for a good reason.
They're not just some of the largest and most important but also some of the most pro-cyclical. If anything is wrong with the economy, the market will send us a signal by decimating these stocks.
Steve Strazza recently wrote, "Semiconductors are the market's most critically important industry group. We may lose the bull market altogether if we lose the semis and NVDA."
Facts only! 💯
We have a lot to unpack today, so let's talk about what else happened 👇
Here are the latest earnings reactions from the S&P 500:
*click the image to enlarge it
As you can see, Broadcom $AVGO had the best reaction score on Friday, and Hewlett Packard Enterprise $HPE had the worst.
The stock with the largest market capitalization was AVGO, and the smallest was Cooper Companies $COO.
Now, let's dig into the data and talk about the most significant earnings reactions 👇
AVGO followed through on its Q4 2024 earnings reaction:
Broadcom reported a double beat, and the market loved it. The stock rallied 8.6% with a reaction score of 1.69.
The company reported a record $14.9B in revenue, a 25% increase year-over-year. This was led by the AI segment, which grew an absurd 77% over the same timeframe.
In addition to the great quarter, they issued fantastic forward guidance. This helped fuel a strong reaction.
The stock successfully retested the gap from last quarter, which was the best earnings reaction ever. We expect buyers to continue stepping in at this level for the foreseeable future.
If AVGO is above 186, the path of least resistance is higher.
COST decisively failed a breakout with its earnings reaction:
Costco Wholesale reported mixed results and was punished for it. The stock fell 6% with a reaction score of -5.82.
The company's margins are decreasing, and the market isn't happy about it. Given the nature of their business, maintaining strong margins is paramount.
The stock price has been in a relentless uptrend, but this earnings reaction is a significant headwind.
If COST is below 1,020, the path of least resistance is sideways.
HPE had its worst earnings reaction ever:
Hewlett Packard Enterprise reported mixed results and paid dearly for it. The stock declined by 12%, with a reaction score of -5.97.
The company's free cash flow and margins are declining as competition in the server business has increased.
Adding fuel to the fire, they issued very disappointing guidance... The management team here sucks!
Technically speaking, this stock has suffered tremendous damage, and it's back in the penalty box.
We expect HPE to churn sideways below 19.50 for the foreseeable future.
