Broadcom crushed earnings (and still got crushed) 📉

Welcome back to the Day Trading newsletter 📈

The Dow punched to a fresh record Wednesday, but it masked a jittery tape: investors yanked money out of high-flying AI chip names and into banks and retail, then Broadcom's after-hours stumble set up a rough morning for the whole AI trade.

Let’s get into it 👇️ 

🔼 The Dow surged to a record Wednesday even as the AI trade wobbled, jumping 911 points, or 1.8%. Investors rotated out of high-flying chip stocks and into banks, retail, and healthcare, with UnitedHealth climbing 5.8% to lead the index higher. The Nasdaq slipped about 0.2% as nerves built ahead of Broadcom's earnings.

📊 CrowdStrike beat on earnings, raised its full-year forecast, and announced a four-for-one stock split… and the stock still fell. Revenue rose about 26% to $1.39 billion, topping estimates, and net new annual recurring revenue hit a record. But shares still slid in a "sell the news" reaction, as a softer billings figure and a steep run-up into the print left little room for good news.

🛍️ PVH, the parent of Calvin Klein and Tommy Hilfiger, cratered roughly 20% after warning that the Iran war is denting international sales. The company actually beat first-quarter estimates with $2.01 in earnings per share, but cut its full-year revenue outlook to "approximately flat," citing weakness across Europe, the Middle East, and Africa.

💼 Private employers added 122,000 jobs in May, more than expected and the strongest month since January 2025. The ADP report topped forecasts of around 110,000, with hiring spread across eight of the ten sectors it tracks and annual pay up 4.4%. The resilient labor data reinforced bets that the Fed will hold rates steady at its June meeting.

🛢️ Oil pushed higher Wednesday, with Brent crude climbing toward $98 a barrel as the Iran conflict kept supply fears alive. US crude inventories fell for a sixth straight week, dropping nearly 8 million barrels - the steepest draw since February. Shipping through the Strait of Hormuz, the artery for about a fifth of the world's oil, remains subdued.

🔻 Bitcoin slid to around $66,650, extending a sharp pullback from its recent high near $75,850. Heavy outflows from bitcoin ETFs, sticky inflation, and a stronger dollar have soured crypto sentiment, with Ethereum dropping below $2,000. The selloff shows how tightly crypto is now tracking the same higher-for-longer Fed worries weighing on stocks.

📉 Gold slipped further below $4,500 an ounce as strong jobs data dimmed hopes for near-term Fed rate cuts. The metal is now down roughly 25% from its January record above $5,600. This is an unusual move during a war, as elevated oil and inflation keep the Fed pinned at restrictive rates. As one analyst put it, gold needs the conflict to end, not escalate, to rally.

Broadcom reported fiscal second-quarter results Wednesday afternoon that topped Wall Street across the board, then watched its stock fall off a cliff. 

Revenue hit a record $22.2 billion, up 48% from a year ago, and adjusted earnings came in at $2.44 a share versus the roughly $2.32 analysts expected.

Semiconductor revenue tied to artificial intelligence jumped 143% to $10.8 billion (nearly half of total sales).

AI bookings topped $30 billion during the quarter. It’s now running at more than three times what Broadcom actually shipped, providing a strong sign that order backlog keeps swelling.

Management guided AI chip revenue to grow more than 200% to about $16 billion next quarter.

Even so, shares sank roughly 14% in extended trading after the report.

This is what "priced for perfection" looks like.

Broadcom's numbers were genuinely strong, but the stock had run up so far that merely beating wasn't enough.

Two things spooked investors:

1. The infrastructure-software unit (home to VMware) came in at $7.2 billion, just shy of the roughly $7.3 billion Wall Street wanted

2. CEO Hock Tan declined to raise the company's full-year target of $100 billion in AI chip sales.

For a name that's become a barometer for the entire AI trade, a "good but not blowout" quarter was enough to trigger a rotation.

Investors pulled money out of chip stocks and parked it in banks, retail, and healthcare instead.

What to watch:

• Whether the AI-trade wobble spreads. Broadcom's stumble dragged on chip peers and set a nervous tone heading into Thursday.

• Whether Tan's $100 billion AI target gets revised upward later this year

• And whether the rotation out of AI names is a one-day reshuffle or the start of something broader.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.