Jim Cramer Notes He is "More Positive in Broadcom" After Its Earnings Report

Broadcom Inc. (NASDAQ:AVGO) is one of the 14 stocks on Jim Cramer’s radar. Commenting on Broadcom Inc.’s (NASDAQ:AVGO) recently reported quarter, Cramer said:

“There’s nothing more frustrating than watching one of your favorite companies report a strong quarter only to see the market find some reason to send the stock lower, but in retrospect, these can be great buying opportunities. Just look at what happened to Broadcom last week… long-time Cramer fave, big holding in my Charitable Trust. But the stock sold off hard after the company reported on Thursday night… Putting it all together, though, I think the main problem is that Broadcom stock had run up so dramatically from the April lows. Think about this trajectory. The stock bottomed at $138 in April. It was at nearly $260 before it reported last week. Under those circumstances, anything less than perfection was going to be punished. And while the quarter was very good, it certainly wasn’t perfect, which is why, despite the post-earnings sell-off, I still like the stock and think you may be getting a terrific buying opportunity here…. I think the bears are missing some even more important positives for the quarter, outside of just the headline numbers. For starters, Broadcom’s AI revenues came in at $4.4 billion. That’s an increase of 46% from the previous year and up from the already impressive $4.1 billion just last quarter. While that was merely in line with expectations, it underscores that the company’s seeing the most enticing part of its business inflecting. I like this. This strength is coming from both parts of their AI business….. AI chip sales are expected to get to be $5.1 billion this quarter, and that’s up another $700 million sequentially, mind-boggling, $300 million more than the analysts were looking for. That’s something. This would represent 60% growth for AI chips year-over-year. That’s amazing. This, you see, this is why it’s so hard for me to justify the pullback in Broadcom stock. They’re selling a stock that’s guided for AI semiconductor sales to come in $300 million higher than expected because they’re worried about the slow growth non-AI part of the business. That’s nuts… … Broadcom paid out $2.8 billion in dividends last quarter, and on top of that… they spent $4.2 billion to repurchase 25.3 million of their own shares… Always good to see the company buying its stock right alongside. Here’s the bottom line: Contrary to the market’s reaction, there was plenty to like about Broadcom’s quarter, and the stock only sold off because some investors were expecting an insane blowout. Honestly, I’m more positive in Broadcom than I was before the report. And the fact that you can buy the stock at a discount here, I think it’s a steal.”

A technician working at a magnified microscope, developing a new integrated circuit. Broadcom (NASDAQ:AVGO) develops and supplies a wide range of semiconductor products, including custom chips for networking, broadband, wireless communication, and mobile devices, along with components for industrial, storage, and optical applications. The company focuses on both digital and analog technologies used in various electronics and connectivity solutions. While we acknowledge the potential of AVGO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None.