CNBC’s Jim Cramer told investors on Friday to buy the dip in Broadcom stock after earnings. “This company is on fire,” Kramer said on “Squawk on the Street,” pointing to the custom chip maker’s long list of high-profile customers, including Alphabet, Meta Platforms, ByteDance’s TikTok and Anthropic. Shares fell nearly 11% after Thursday night’s strong quarterly results and guidance hikes, overshadowed by some misguided statements from management on the earnings call. It didn’t help that Broadcom stock soared this week ahead of print, adding to already high expectations. There may be some profit-taking activity here as well. So what happened on the phone? Already concerned about the AI uproar, The Street also became concerned about Broadcom’s partnership with Google’s parent company Alphabet. Broadcom co-designed a custom Google chip that trains and runs the Gemini 3 AI model. Investors didn’t like how Broadcom CEO Hock Tan responded to a question about Broadcom’s customers potentially developing custom chips themselves. Mr. Tan did not completely deny this idea. In addition to this, Broadcom CFO Kirstin Spears raised margin concerns. “In the second half of this year, we’ll start shipping more systems, and the picture is simple: You’re going to have a lot more components going through that aren’t ours. … Those costs are going to be going through more costs in the rack, so your gross margins are going to go down,” she said. Kramer directly criticized the conflict of interest narrative, saying neither was cause for concern. “If the margin explanation is the reason for the stock price to fall, it’s basically an opportunity,” he said. “Ultimately, even if gross margins are lower, there will be more business and perhaps new customers.” Following Thursday night’s earnings call, the club reiterated its rating on the stock with a Hold rating of 2, but raised its price target by $10 per share to $425. Broadcom hit a record closing price of $413 on Wednesday, which was close to its previous PT. Broadcom and Meta hold the 35-stock CNBC Investing Club portfolio. (The Jim Cramer Charitable Trust is long AVGO, META. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
