AVGO TPUs, Cloud Face Earnings Test in GOOGL, Anthropic Partnerships

about 2.2%. All right. Let's take a look here. We're looking at Broadcom right now down about a half a percent. We want to preview today's earnings report for our tech spotlight. And there he is. Angelo Zaino senior equity analyst at CFR a research. So glad you are with us Broadcom. You know we always talked about the mag seven. This was like the honorary mag eight. What do you think. Here. What are you waiting on. What do you need to see from today's earnings report. Let's talk about that. Yeah. So Nicole thanks for having me. I'd say Broadcom expect some good results from them. I mean you're looking at you know a number where we're you know revenue is going to grow north of 80% this this quarter year over year expect you know a kind of you know ongoing strength here going into the the October quarter. And, you know, I do think to to an extent for Broadcom, the bar has been raised. Obviously you had Nvidia which just gave an unbelievable guidance and actually gave some visibility for calendar 27. So to some extent there are going to be expectations here on this call for for Broadcom to really provide more to the investment community. Whether or not Broadcom provides some additional detail I think will essentially make or break or dictate how the stock performs after the result. But ultimately listen the fundamentals remain very strong when you look at their custom silicon pipeline. Looking ahead here over the next couple of years you would expect that you know overall the trajectory looks pretty good in terms of maybe some of the questions that that might be out there or, you know, where investors are kind of lingering, hoping to get more answers on, I would say we want more clarity in terms of that TPU exposure from Google's business. Obviously, Google is broadening out their, their supply chain. So we want to make sure that Broadcom continues to be well entrenched in there, which we think they are. And then you know, anything that they have to say in terms of you know financing commitments and what have you is probably another area of concern out there for investors. Just kind of given, you know, the rising interest rate environment and what have you. Yeah, because you talked about Google now and there were questions whether or not a CEO Hock Tan would actually talk about AI customers, AI competition is something that was also mentioned for, in fact, the Google's custom chip business. So, you know, you have these partnerships that you noted here in your notes talking about those partnerships at the same time, competition. What do you think people may be listening for? Yeah, I mean, again, I think the most important aspect of this call, it's not going to be the potential beat and raise, because I think that's almost expected at this point in time. And I think it's also important as a reminder for everybody that when you actually look at the peak of the semi trade, it actually happened when Broadcom reported its last earnings results. Right. That was kind of a time where Hock Tan essentially came out there and delivered pretty good results and good guidance. But he didn't deliver that big beat and raise type quarter that maybe, you know, people had been accustomed accustomed to seeing. So that was really kind of the peak of the trade at this point in time. As you kind of go into this earnings call, obviously the bar to some extent is lower in the sense that the stock just hasn't been working. The multiple has compressed significantly. And as you kind of look, again, maybe on this call, what people do want to hear, I'd say as far as that, that pipeline is concerned, whether it be the Anthropic's, the Googles of the world, they want to make sure that that those existing clients are going to continue to spend more with them. I mean, you're looking at about 50, 55 billion here, this this fiscal year, they're guided toward north of 100 billion next year, but the street's probably closer to 120 billion. So they're going to want to see something maybe closer to 150 billion or something along those lines. So we kind of want to hear the clarity on that side. And as far as competition is concerned, yes, the competitive landscape is getting more fierce on the custom silicon side, but also important to note that the overall custom silicon market is growing, we think is going to grow much bigger and faster than the broader GPU market and overall accelerator space over the next couple of years. And there's a lot of obviously, when we talk about hock tan and a lot of people really believing in this CEO, but I think about the long term, whether or not the company can really now move and shift from these large models to running these AI applications at scale. You know, we're looking way ahead. I see some of these projections into, you know, the year 2030 that, you know, when you think about what does it do going forward, it also maybe faces some risks. You list some risks here to tell us about that. Yeah. I mean, as far as, you know, some of the concerns out in the market. I mean, listen, I think what's a little bit different as far as the custom silicon space is, is concerned relative to maybe what what Jetson has to, you know, say, as far as the GPU landscape is that the GPU landscape, as far as, you know, their Cuda platform is, is something that you can kind of be sold and interchanged on any platform out there. And it's got a massive developer community north of 6 million developers out there. So there are, you know, in terms of the selling point and the ability, ability to finance that kind of landscape, it makes a lot more sense there. I think it's a little bit harder to kind of use that as a selling point for hot ten. And I'd say the overall custom silicon market. Now, that being said, I will say this when you think about any major hyperscaler out there, they do want to, you know, to some extent diversify away from Nvidia's GPUs. So that's really where Broadcom really stands to benefit, as they are the biggest provider of custom silicon chips out there. But nonetheless, I mean, I think the biggest risk out there is the trajectory of the, the pipeline out there and whether or not anthropic and maybe to a larger extent, open AI, as we go into 27 and 28, will be able to meet some of the commitments that they've promised out there to Broadcom. I was also looking at just the the price target itself. You have 450 from 525 using your analysis there, bringing that down a bit. But most folks are still thinking this name is a top pick. And from 369 to 450 you do have a buy rating. It still shows the upside potential. Tell us a little bit more about your specific analysis and how you got to this number of your four 5012 month price target. Yeah. And I think it's a good question. So the way we've kind of been looking at the chip landscape, I'd say over the last couple of weeks and months, and I think this is a really important earnings season is I think we've now passed, I'd say, peak growth for the semiconductor industry. And that's a really important point because I'd say Q2, we saw growth north of 120% year over year. We didn't say anything like that, near anything like that here over the last 15, 20 years. If you actually look off the financial crisis, the semi industry in Q1 of 2010 grew a little bit north of 50% on a year over year basis, which kind of tells you the magnitude of what we're seeing at this point in time off of what we call year three of the up cycle at this point in time. So we're seeing extreme strength. A lot of that strength at this point in time is coming from a very strong pricing environment. So growth rates are going to decelerate here over the next couple of quarters and years. Doesn't necessarily mean you're at a peak. But at the same extent, I think you do have to kind of compress some of the multiples a little bit as now investors might be kind of looking towards, you know, what the other side of the cycle could potentially look like, the sustainability of the existing environment, which is why we kind of pulled down our multiple. It's also closer to how we're valuing others in this space. Some of the bigger names like Nvidia, which, you know, we've also compressed the multiple down to about a mid-teens level on a 2028 basis. So past the peak growth, I think is very interesting. So slower growth still growing, still a high demand, but slower growth. And obviously Broadcom is such a huge footprint here. One of the largest in the world. You have Nvidia micron Advanced Micro Texas Instruments Marvell. So all of those names you're bringing down for the most part those multiples. Is that right. Yeah. I mean I think you have to at this point in time, I do think you have to compress the multiples a bit. I think it makes sense. But again, it's one of those things where the earnings trajectory continues to be fairly strong in nature. Okay. Angelo Zino great to see you. And so now just be waiting to see the numbers from Broadcom. Thank you so much for this