Shares of fabless chip and software maker Broadcom (NASDAQ:AVGO) jumped 5.5% in the afternoon session after the company is expected to receive conditional approval from the European Union for its $61 billion acquisition of VMware. This approval is subject to Broadcom offering solutions to address antitrust concerns. The news comes amidst ongoing investigations by the U.S. Federal Trade Commission and the UK's antitrust regulator.
What is the market telling us:
Broadcom's shares are somewhat volatile and over the last year have had 9 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was 13 days ago, when the company gained 8.52% on the news that the stock enjoyed bullish sentiments from Wall Street analysts who expected huge potential in the artificial intelligence market. KeyBanc Capital Markets' John Vinh expects Broadcom to benefit in the near-term from its generative AI capabilities--specifically, its TPU product. JPMorgan's Harlan Sur echoed this and praised Broadcom's custom-chip business, which he said is "gaining traction with Google for its cutting-edge AI processor chip, TPU."
Broadcom is up 54.3% since the beginning of the year. Investors who bought $1,000 worth of Broadcom's shares 5 years ago would now be looking at an investment worth $3,270.
Is now the time to buy Broadcom? Access our full analysis of the earnings results here, it's free.