Broadcom's post-earnings pullback doesn't shift the fundamentals. It's a buying opportunity

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Semiconductor firm Broadcom (AVGO) reported better-than-expected quarterly results Thursday, even as the stock came under pressure due to a miss on cash flow.

Semiconductor firm Broadcom reported better-than-expected fiscal third-quarter results Thursday, even as the stock came under pressure due to a miss on cash flow and in-line guidance. But we're unconcerned about the pullback and see this newest Club holding as clear beneficiary of the artificial-intelligence craze, with more room to run. Revenue for the three months ended July 30 increased 5% year-over-year, to $8.88 billion, exceeding analysts' forecasts of $8.

On the hyperscale front, Broadcom CEO Hock Tan attributed the strength to generative-AI initiatives, noting that the company supplies a "major hyperscale customer with custom AI compute engines." That customer is almost certainly fellow Club name Alphabet , which collaborates with Broadcom on on the design and manufacture of Google Tensor Processing Units . Tan also said that sales related to generative AI are responsible for essentially all growth seen in the semiconductor business.

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