Broadcom Drops 5% on Rising Yields, Gets Buy Upgrade with $29.4B Forecast
AVGO•Broadcom shares fell roughly 5% after a hotter jobs report lifted Treasury yields and widened tech selloff, extending a three-day Nasdaq decline. Erste Group upgraded the stock to Buy, forecasting fiscal Q3 revenue of $29.4B, 89% growth y/y, driven by $16B in AI semiconductor sales.
1. Market Selloff Spurs Broadcom Decline
Broadcom shares slid about 5% in the latest session, extending a tech-driven market downturn that saw the Nasdaq drop over 2%. The selloff followed a hotter jobs report that pushed Treasury yields higher, reducing appeal of growth stock valuations.
2. Impact of Strong Jobs Data
May's U.S. jobs report exceeded forecasts, lifting Treasury yields above key levels and intensifying pressure on richly valued tech names like Broadcom. Higher yield expectations dampened hopes for a near-term Federal Reserve rate cut, weighing on semiconductor stocks.
3. Erste Group Raises Rating to Buy
Analyst Hans Engel upgraded Broadcom to Buy from Hold, citing the recent pullback as a buying opportunity. The upgrade reflects confidence in Broadcom's ongoing momentum and AI-led growth strategy.
4. Robust Fiscal Q3 Outlook
Engel projects fiscal Q3 revenue of $29.4 billion, up 89% year-over-year, with AI semiconductor sales accounting for roughly $16 billion. High gross and operating margins are expected to sustain Broadcom's strong earnings profile.
