 Dear Reader, It's official. Elon Musk's SpaceX has confidentially filed for IPO with the U.S. SEC. The filing positions the company for a June 2026 listing … With a staggering valuation exceeding $1.75 trillion. Biggest IPO in history. But before you go out and load up on as many SpaceX shares as you can … Know this: Our expert says there's a much better way to tap into this massive IPO windfall … And most people have no idea it exists. Click here to find out more. Eliza Lasky
Weiss Ratings
Further Reading from MarketBeat Media
Big-Tech Earnings: Google and Meta's Results Support Broadcom's OutlookReported by Leo Miller. Date Posted: 5/4/2026. 
Key Points
- Hyperscaler earnings are critical signals for downstream partners like semiconductor giant Broadcom.
- Google's explosive cloud sales and backlog growth show that Broadcom's top customer is only growing stronger.
- Google expects significant capital expenditure increases in 2027 while Meta left this as a possibility: positive signs for Broadcom.
- Special Report: The $1.75T "Backdoor" ticker (NOT Starlink)
Top hyperscalers reported earnings in the final week of April and received a mixed reaction from investors. The day after reporting, Google's parent company, Alphabet (NASDAQ: GOOGL), was the clear winner, rising about 10%. Amazon.com (NASDAQ: AMZN) rose under 1%, while Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META) fell roughly 4% and 8.5%, respectively. Except for Amazon, these companies shared a common theme: higher artificial intelligence (AI) capital expenditure expectations. For semiconductor giant Broadcom (NASDAQ: AVGO), the results from Google and Meta are especially important. Both partner with Broadcom to develop and deploy custom AI chips, and their results and outlooks point to stronger demand ahead. Google: Broadcom’s Top Customer Crushes Earnings as Cloud Growth Soars
Google stood out, posting a strong sales beat and a massive earnings-per-share (EPS) beat. EPS came in at $5.11, nearly double the $2.64 analysts expected. A large portion of the EPS beat came from an increase in Google’s “Other Income” line, which more than tripled year over year from $11.2 billion to $37.7 billion. That primarily reflected appreciation in Google’s non-public equity investments in firms such as SpaceX and Anthropic. Even excluding those investment gains, Google would have reported a meaningful beat. That matters for Broadcom because Google is its largest custom-chip partner, and Google Cloud — the segment most relevant to Broadcom — stole the show. Cloud revenues rose 63% to more than $20 billion, the fastest growth among Google's businesses. The company’s cloud backlog nearly doubled in one quarter to $462 billion. Deployment of tensor processing units (TPUs) — the custom chips Google co-develops with Broadcom — will support much of this backlog. Google also plans to sell TPUs to select customers for deployment in their own data centers, creating an additional source of demand for the chips. In short, Google Cloud is experiencing robust demand, and Broadcom is directly tied to that growth. Google expects only around 50% of its cloud backlog to convert into revenue over the next 24 months, which suggests demand for Broadcom’s TPUs should extend well beyond the near term. Meta Exceeds Expectations on Strong Advertising GrowthMeta also reported strong results, beating on sales and EPS even after adjusting for unusual factors. Revenue grew 33% year over year, the fastest pace since 2021 and above the midpoint of guidance at 30%. Broadcom helps Meta develop its Meta Training and Inference Accelerator (MTIA) chips, which power Meta’s ranking and recommendation models that determine what content and ads to show users across its apps. Meta’s advertising business expanded at a pace not seen in years, and MTIA chips are a meaningful driver behind the models enabling that growth. Meta will also deploy future versions of MTIA to support generative AI inference workloads, which likely back emerging AI features and products that are still early or unreleased. Although the specifics of those future offerings remain unclear, they represent an additional and growing source of demand that Broadcom can benefit from. 2027: Google Expects Significant CapEx Increase, Meta Makes Encouraging StatementsGoogle raised the midpoint of its CapEx guidance for 2026 by 4% to $185 billion, primarily to account for its $4.75 billion acquisition of Intersect, which does not directly benefit Broadcom. More importantly, Google said “we expect our 2027 CapEx to significantly increase compared to 2026.” That is a clear positive for Broadcom, indicating its largest customer plans to spend more in 2027 and supporting higher demand for TPUs and Broadcom’s AI networking solutions next year. Meta also raised its 2026 CapEx guidance by 8% at the midpoint to $135 billion, but noted that increase was mainly driven by higher memory chip prices — a dynamic that does not meaningfully benefit Broadcom. Looking further out, Meta’s commentary was encouraging for Broadcom. When asked about 2027 CapEx on the earnings call, Meta didn’t provide a specific number, but Chief Financial Officer Susan Li said: “Our experience so far has been that we have continued to underestimate our compute needs, even as we have been ramping capacity significantly as the advances in AI have continued and our teams continue to identify compelling new projects and initiatives, and now too there are very compelling internal use cases. Our expectation is that compute will become even more central to the business going forward.” That suggests demand for compute (chips) is on an upward trajectory. Meta has historically underestimated its needs and continues to find new opportunities to deploy AI. While this is not an explicit confirmation that CapEx will rise further in 2027, it keeps the possibility open. Broadcom Maintains Its Stalwart Position in AITwo of Broadcom’s top customers beat sales expectations, and Google provided especially strong forward-looking signals. Google explicitly said it expects spending to rise in 2027, while Meta left the door open to increased 2027 spending. Taken together, these developments are encouraging for Broadcom and point to rising demand for its critical AI infrastructure solutions.
. |
No comments:
Post a Comment