Chip stocks have been on a wild ride today after Broadcom (NASDAQ:AVGO) reported tidily beating earnings expectations. High-growth chip makers Nvidia (NASDAQ:NVDA), Lam Research (NASDAQ:LRCX) and Advanced Micro Devices (NASDAQ:AMD) rallied this morning before ultimately pulling back.
So what’s going on with chip stocks today?
After a tech sector drop Thursday that brought the Nasdaq down 1.7%, chip stocks could be the index’s saving grace. Although NVDA, AMD and LRCX have dipped into the red, Broadcom is winning the day. AVGO stock is up more than 7% today despite some discouraging inflation news.
Data released today detailed higher-than-expected increases in consumer prices last month. In November, the Consumer Price Index (CPI) rose 6.8% year over year. Not only does that dwarf a 2% target from the Federal Reserve, it’s the largest increase since July 1982. Some are interpreting this news as evidence that the Fed will accelerate its current tapering schedule.
What Else Has Chip Stocks Buzzing Today?
The chip news of the day is Broadcom’s earnings call for the fiscal fourth quarter. It beat earnings-per-share expectations by 0.47%, with an expected EPS of $7.77 compared to $7.81 reported. Revenue was similarly fruitful. It reported $7.41 billion in revenue this past quarter, compared to $7.36 billion expected, for a 0.59% beat.
Perhaps more exciting to investors was news of positive guidance for the fiscal first quarter, a dividend increase and a $10 billion share buyback program. As InvestorPlace contributor Joel Baglole wrote this morning, Broadcom shared a lot of positives for investors.
It’s no surprise then the news has semiconductor companies in a frenzy today. Sky-high demand, combined with chip shortages expected to last until 2023, makes for a no-lose scenario for many semiconductor stocks.
On the date of publication, Shrey Dua did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
