Mizuho Sees Contrarian Opportunity in Broadcom (AVGO) Stock Ahead of Earnings

Key Highlights

Table of Contents

Mizuho’s Jordan Klein views Broadcom’s recent decline as an attractive entry point near $370 ahead of the company’s September 2 earnings release
CEO Hock Tan has avoided consecutive negative post-earnings reactions for approximately 30 quarters, spanning nearly seven years
Concerns about Google developing proprietary ASIC chips and potentially reducing Broadcom’s hyperscaler business represent the primary headwind
ARK Invest acquired approximately $20.6 million worth of Broadcom shares while simultaneously trimming its AMD holdings by roughly $18.2 million
Historical patterns show Broadcom typically experiences price swings 2 to 3 times larger than NVIDIA after quarterly reports, amplifying the significance of the upcoming release

Shares of Broadcom have declined by mid-teen percentages over the last two weeks, but Mizuho TMT Sector Specialist Jordan Klein believes this pullback presents a compelling opportunity. As the company prepares to report earnings on September 2, Klein highlights what he characterizes as an asymmetric risk-reward profile at the $370 level.

Broadcom Inc., AVGO

Klein’s thesis centers heavily on market sentiment. He describes current positioning in AVGO as the “total opposite” of where it stood three months earlier, when shares entered early June earnings with considerable bullish momentum before plunging approximately 12% in a single session following disappointing forward guidance.

The primary concern pressuring shares currently revolves around Google. Market participants fear that Alphabet’s initiative to design proprietary application-specific integrated circuits will diminish Broadcom’s sales to major hyperscale cloud providers.

While Klein acknowledges this challenge as legitimate, he believes the market has fully incorporated this risk and possibly overreacted. His assessment suggests that consensus expectations have reached peak negativity, which frequently precedes sentiment reversals.

CEO Hock Tan’s Proven Performance

Klein’s investment thesis draws significantly from historical patterns. He emphasizes that CEO Hock Tan has avoided consecutive negative stock reactions following earnings announcements for nearly 30 quarters—approximately seven consecutive years.

Competitive dynamics also factor into Klein’s analysis. Both NVIDIA and Marvell Technology have recently emphasized accelerating revenue trajectories during their respective earnings presentations. Klein suggests Tan will likely counter these narratives aggressively.

“No way he sits by and lets the shorts manhandle his stock,” Klein stated in Mizuho’s research note. His expectation centers on management proactively addressing the Google market-share concerns while providing optimistic revenue forecasts extending into 2027 and 2028.

Klein isn’t forecasting a dramatic 25% surge. Instead, his perspective maintains that the risk-reward equation at the $370 price point tilts favorably toward upside potential over a six-month-plus timeframe. NVIDIA continues as Mizuho’s primary semiconductor recommendation, with Broadcom positioned as a complementary play.

ARK Invest Increases Broadcom Stake

Cathie Wood’s ARK Invest expanded its Broadcom holdings on Wednesday, purchasing approximately 57,705 shares distributed across several ETFs totaling about $20.6 million. Simultaneously, ARK divested approximately 37,977 AMD shares valued at roughly $18.2 million across four different funds.

This AMD reduction represented a continuation of earlier selling activity during the week, suggesting an ongoing reallocation within ARK’s AI semiconductor portfolio.

ARK also accumulated approximately $12.8 million in Cerebras shares and about $13.3 million in Cloudflare during the same trading session.

A key factor elevating the importance of the September 2 announcement involves Broadcom’s characteristic earnings volatility. Mizuho research indicates AVGO historically experiences price movements 2 to 3 times greater than NVIDIA following quarterly results, regardless of direction.

Market participants will focus on two critical elements from Tan’s presentation: specific commentary regarding the ongoing Google ASIC partnership, and detailed revenue guidance for fiscal years 2027 and 2028 related to AI-driven opportunities.

Mizuho’s note did not include a specific price target or formal rating recommendation for AVGO shares.

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