Investors Encouraged to Buy Broadcom Stock Dip
CNBC’s Jim Cramer advised investors on Friday to consider purchasing shares of Broadcom after its earnings report. He described the company as “on fire” during his segment on “Squawk on the Street,” highlighting its impressive roster of clients, which includes major players like Alphabet, Meta Platforms, TikTok, and Anthropic.
Shares of Broadcom experienced a nearly 11% drop following strong quarterly results and an optimistic outlook due to some miscommunication during the earnings call. The stock had surged ahead of the report, leading to elevated expectations, and there may have also been some profit-taking going on.
So, what was discussed during the call? The Street, already apprehensive about the future of AI, expressed concerns regarding Broadcom’s relationship with Google’s parent, Alphabet. Broadcom collaborated with Google to develop a custom chip designed to support the Gemini 3 AI model. Investors felt uneasy about CEO Hock Tan’s response to questions about whether Broadcom’s customers might start creating their own custom chips, as he didn’t outright rule out the possibility.
Furthermore, CFO Kirstin Spears raised some doubts about margins, suggesting that costs would persist as more systems are scheduled to ship later this year. Cramer asserted that these comments shouldn’t be a significant cause for concern and don’t necessarily imply a negative margin outlook. He emphasized that if these margin comments are what’s driving the stock’s decline, it might actually present a buying opportunity. “Even with lower gross margins, more business and new customers should come in,” he stated.
On Wednesday, Broadcom’s stock reached a record high of $425, or an increase of $10 per share. This was nearly in line with the previous CNBC Investment Club portfolio stakes in Broadcom and Meta. Subscribers to Cramer’s club get trade alerts before he makes any moves, with a 45-minute waiting period after an alert before acting on trades. If a stock is mentioned on CNBC, he waits 72 hours following a trade alert before taking action.
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