Broadcom Stock Whiplash After Earnings Release

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Tyler Crowe, Matt Frankel, and Lou Whiteman discuss:

• Broadcom’s good earnings.
• Playing the expectations game in a volatile market.
• Stocks doing well in downtrodden industries.
• Listener questions: How will the SpaceX, Anthropic, and OpenAI IPOs impact cash on the sidelines and ETFs?

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on June 4, 2026.

Tyler Crowe: We've got Broadcom stock whiplash today on Motley Fool Hidden Gems Investing. Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe, and today I'm joined by longtime Fool contributors Lou Whiteman and Matt Frankel. Today, we were going to mix it up a little bit. We thought we're going to do a bunch of different segments and do some basically non-earnings takes because it's June. We don't normally get a lot of surprise earnings stuff, but then Broadcom had to go and give its earnings, and now its stock’s down, I think, almost 15% as we are taping today, as we're going to get into. I'll let you guys really digest the numbers here. But by all objective metrics, all the numbers looked good. The guidance looked fine. Is this really just expectations game, Lou?

Lou Whiteman: I think it is. Expectations are everything. It's glass half full of glass empty. Stock is up 15%, just heading into earnings. When you get that sort of expectations, any slight hiccup, any slight sneeze can set you back. This was a slight miss on revenue, but look, it's brutal when people are expecting enough. Apparently, it was enough to outweigh 140% gains in AI semiconductor sales, which I don't know, Tyler, sounds pretty OK to me.

Tyler Crowe: Matt, you were the task a little bit more with the nitty-gritty of the numbers here. What did you see in this that was like, maybe not great. I don't know. It's hard to look at these and say, Yeah, we should definitely be dropping the stock by 15% because that's just what we do these days.

Matt Frankel: It's not only Broadcom. CrowdStrike also reported. We're getting all the reports from companies that use weird fiscal years, and some of them haven't been too impressive. But there was a lot to like here, 48% revenue growth, they beat on the bottom line. As Lou said, 140% roughly growth in AI semiconductor revenue. Guidance was strong, but if you look into the guidance, the AI revenue that they're guiding for is not quite what the market expected, so that could be driving a little bit of the sell-off. Any slowdown in AI or perceived slowdown is enough to scare investors, and it's not just that it was running up 15% heading into earnings, Broadcom was up 90% over the past year. In a nutshell, this stock went into the report priced for a blowout quarter and blowout guidance. It was a good quarter. I wouldn't call this a blowout quarter, especially on the AI side of the business, not a blowout.

Tyler Crowe: We certainly did see a lot of blowouts this most recent quarter looking at a lot of these suppliers. Taiwan Semi, basically everyone was like, everything is awesome. With Broadcom's numbers looking pretty good. It was almost like comparing to everyone else. Is like, Well, they were that good. Can you do as well? This touches on a couple of top themes and topics we've discussed so far during this week. When the three of us were on the show on Tuesday, we were talking about how much does narrative play into your thesis? Narrative is also valuation-based. We were talking about this with Dollar General because, as a value play as a stock, you are betting on a return to median, return to average valuation.

Right now, we're all the narrative is defying expectations to justify very high valuations. At the same time, too, it touches on this idea of the start-stop whack-a-mole discussion about the AI build-out that, Lou, you, I, and Travis were talking about yesterday, where it seems like every couple of months here, we're talking about the next bottleneck. At first, it was is going to be chits. Then it became memory chips. Now we're talking about, the old companies like Dell that are just building off products, and we can name like 15 other suppliers where somewhere there's a stop-start going on here where somebody's doing awesome, but then, just because they didn't blow out earnings, they're going to have a 15% stock drop.

Lou Whiteman: Two points here, one macro, one micro, I guess. First of all, the macro, the narrative. I think you are so right and I think investors better be watching the narrative right now because there is a real indication that nothing is good enough. I look at what happened with Nvidia’s quarter. Look what the stock did there. Expectations are so out of this world right now that I don't know if any company, almost, can satisfy the market long term. For strong companies that can outlast the cycle, that's just an annoyance. But if you are in some of the, I guess, more speculative AI companies, I think this should be a warning sign to you that nothing is good enough, so look out below.

Specific to Broadcom, look, there are massive expectations still up ahead. CEO Hock Tan is forecasting $100 billion in annual AI chip revenue in fiscal ‘27. They're on pace to do about half of that this year, Tyler, and it took triple-digit gains to get to that 50 billion that they hope to do this year. I see that the stop-start nature of this, the questions about potential fragility, and it scares me. You add in the fact that OpenAI and Anthropic are going to account for a lot of that growth. Those are two very different companies right now. Even if OpenAI gets their act together and does well, you are putting a lot of eggs in just a couple of baskets with that customer concentration. I'm not predicting gloom. Broadcom is a good company, but right now, it's just hard to look at this and say, yes, everything's fine, everything goes up from here.

One other thing, software revenue, which is supposed to be recurring, to balance this out. That only grew by 9%. All of this growth is going to have to come based on their ability to keep selling hardware at really amazing levels. We'll see how long that lasts.

Matt Frankel: To Lou’s point, the expectations are huge here. You mentioned they're predicting about $100 billion of AI revenue in 2027. For about $40 billion of that, a little more is expected to come from Anthropic alone. OpenAI is a big client. The anthropic and OpenAI IPOs are really worth paying attention to. Anthropic just raised $65 billion. We've talked about this with other companies. I think Oracle was one of them where these commitments they're going to need to pay. They raised $65 billion. OpenAI raised $120 billion recently. That's not going to be enough for all of their commitments. These IPOs really need to go well, they need to get strong valuations. OpenAI and anthropic IPOs are probably the single most important near-term story for Broadcom investors to watch. The 2027 and 2028 growth story for the company, which the IPOs are going to directly support. It's largely intact for now, but that could change if demand cools off.

Tyler Crowe: We'll be getting into that in a later segment, but the amount of money that needs to be raised this year to make those commitments to Broadcom and all their other suppliers is looking pretty hefty and could have some pretty profound impacts on the market in general, beyond just those individual companies. But we're going to hit that after the break. But before that, we're going to actually take a pause from the AI discussion and just kind of look at some other sectors and some stocks that are really changing up the narrative of the sector that they're in. We'll hit that after the break.

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Tyler Crowe: I was reading an investing newsletter a couple of days ago, and there was a quote from the chief economist at Apollo talking about diversification and the importance of it. This was an interesting quote to me. It was factor investing tells investors not to be overexposed to just one factor. What he said was, the new 60/40 is now the AI versus non-AI thing. For those who aren't familiar, 60/40 was the benchmark gold standard for individual investors, people, probably not picking individual stocks. 60% of your money in stocks, 40% of your money in bonds, maybe you start changing that as you get older, but it was the standard benchmark that most wealth advisors told you to do to get diversification in the market.

As this quote is saying, it's not just the factor of bonds versus stocks, but it's also how much diversification do you have away from AI? In the spirit of that, we wanted to dedicate a whole segment to basically sectors and parts of the market that just aren't AI. Specifically, we've had a pretty bifurcated market so far. We've had some industries doing extremely well and others have been taking a bit on the chin. I think insurance, healthcare, biotech has done surprisingly not well. Well, energy, semiconductors, technologies absolutely fly. In that vein, what we played a little game with these guys. I each wanted you guys to pick one stock from an industry and find a stock that you find that is bucking the sector trend. Is there a company that's doing lousy in these awesome sectors or a company that's doing gangbusters in a downtrodden sector? I want to start with you, Matt. What's the sector in the stock that you're like, This is interesting.

Matt Frankel: Well, it's been a long time since I've gotten to talk about real estate because all we talk about is AI and SpaceX lately. I'm going to bring up.

Tyler Crowe: That's the whole point of this segment.

Matt Frankel: I'm going to bring up a real estate stock. Over the past three months, the S&P 500 as a whole has gained about 11%, mostly because of the mega‑cap tech stocks. Meanwhile, the real estate sector has been almost exactly flat. It was up 0.02% as I was looking this morning. There are some good reasons for it to be fair, specifically the fact that inflation is at its highest level in three years. There are legitimate concerns about the Fed raising rates. Real estate is a very rate-sensitive sector as a whole.

One that has really bucked the trend is Ryman Hospitality Properties. Ticker is RHP. It's up 18% in the past three months, even beating the S&P, not just the real estate sector. Hotel real estate is generally less rate-sensitive than other real estate subsectors. Unlike things like warehouses and retail properties which rely on long-term leases have predictable cash flow, hotels rent their space by the night and share prices; therefore are more governed by the business performance, which can really ebb and flow over time. Ryman's business has been impressive. In the first quarter, revenue and net income were at all-time highs for that time of year. The company raised its full-year guidance. Average daily rates for the hotel rooms and out-of-room spending were both up by double digits year over year. Their entertainment division is performing really well, especially that Old Red dining and entertainment brand just announced its seventh location. Its flagship Vegas location is dramatically outperforming expectations. Adjusted FFO, funds from operations, which is the real estate version of earnings, grew by 19% year over year. That's a rapid pace for real estate.

Tyler Crowe: Permit me a little bit of a follow up question here. When I think hospitality, too, though, I do think sensitivity to macroeconomic factors. When you look at Ryman, because it is a hospitality REIT, is this a specific REIT that has some call it macroeconomic macro vibes resiliency in it with its business model, or is it a little bit of ride the wave until it's no longer working?

Matt Frankel: That's a really good question because they're a group-focused hotel. The reason that that's important is that they focus on conferences, conventions, things like that, and these tend to book three,, four years in advance. They have a lot of future revenue visibility as opposed to an operator of a Hilton or a non-group focused hotel. They have some resilience, and you got to think of what they're being compared to in year over year. International travel was way down a year ago. That's coming back a little bit. Group events are a very resilient part of the hotel market. You bring up a really good point. I wouldn't really want to invest in a leisure hotel operator with macro uncertainty, but one that has that group-focused business, which is more than half of Ryman's business, it does have a little more visibility.

Tyler Crowe: Lou, I think we're not going to do anything real estate related to what you're looking at here.

Lou Whiteman: No, I will say, though, I'd rather own Ryman than stay at the Grand Old Opery. There's that for it. Look, I'm looking at the transports. I'm going to apply my gratists too, but it's been a pretty crummy few years for the transports. There were a lot of factors driving that. We were coming down from the sugar high of the pandemic where everything was shipped. ASAP. We've had the added uncertainty of tariffs, trade wars, and macro concerns, slowing economy. Big customers tend not to stock up on inventories if they're worried, the economy is slowing. It all has added up to underperformance, really crummy numbers. Nasdaq Transportation index has underperformed the market by 25 percentage points over the last three years.

In that environment, XPO, a trucking company, is up 340%. Easily beating both the transports and the broader market. Now some of that is good fortune. A big competitor, yellow, liquidated, XPO picked up a lot or a good bit of that business at literally prices that made it EB a positive just from Day 1. But it's also management deserves a lot of credit here. This is a story of simplification. Split out a couple of other units to just focus on one thing and being good at one thing. They shedded unrelated businesses that are fine on their own, but not part of the story. They also hired a ton of really, good people from competitors that quite frankly were doing better than them and they've started to shift their focus to margin over volume. This is, I think, sustainable. We've seen with Old Dominion, how a good operator over time can just outperform the sector and the market just based on the strength of their operations. I think XPO has elevated itself to that level.

Tyler Crowe: Similar follow up, and this is a discussion you and I, I think we had a couple of years ago too, where it felt like a time where trucking, especially was like, you've got Old Dominion XPO is up and coming, but you had a lot of subpar operators in this industry, so it was Old Dominion and to a lesser degree, XPO was taking candy from a baby taking market share here because they couldn't seem to get their hand out of the paste jar. It seems like that's less the case now. Obviously, Old Dominion XPO are dominant players here, but some of the other players in the industry found religion, I guess, you will, on March and on capacity additions at a reasonable rate. With that in mind, with the outperformers like XPO and Old Dominion that have done so well, now that they're facing more competent competition, is the growth opportunities as robust here or is it a little bit more of a knife fight for share?

Lou Whiteman A couple of things going on, I think. For one, until recently, XPO didn't deserve to be in that conversation as a good performer. What you've seen is them enter this. I think it's more of a risk for, say, an Old Dominion, which has benefited over the years for just being the only ones who could get pricing right. The other answer is scale. At the end of the day, you still have advantages to scale that you can be more efficient, even if it's the super friends, a couple of players that are really, better than anyone else, there's enough business out there. XPO is finally trading. At a multiple similar to Old Dominion, which you never saw a few years ago. I do think probably the 340% over three years, that we can't repeat that, that a lot of that was playing catch-up. But I think that, like I said, Old Dominion is the model. I think there is room for a few companies here that just outperform their peers and, over time, outperform the market.

Tyler Crowe: Trucking, as boring as it sounds, it's been a weirdly fascinating industry over the past I don't know, at least decade to follow. Interesting to see XPO, I can almost say getting down to fighting weight, I guess would be the best way to put it so they can compete. I'll give my answer here too, because one industry that's been quite lousy this year and so far, year to date, as well as over the past year or so has been insurance. Obviously there is reasons for that. Insurance is a cyclical industry, and a lot of the underperformers in the insurance industry in general have been a lot of high flyers, especially your specialty insurers and things like that. You're also seeing a lot of pricing pressure on the big lines of insurance that we see automotive and homeowners, some of the biggest a lot of these competitors are trying to take share and when you take share, profitability sinks and that tends to hurt stocks.

But health insurance in particular has been hit even harder. Rising costs are getting hard to control, plus lots of backlash from patients, and just in general, the feeling towards health insurers has been not great because high rates of denials, higher copays. It's the stuff that frustrate people using their health insurance. It's led to quite a bit of unpopularity. This is where there’s this one company that seems to be separating itself from the rest here, and obviously, it’s a small one, so it has that opportunity. It's called Oscar Health, ticker OSCR. They straddle this health insurance technology and health insurance broker business. Most of what it did was, when it got started in 2012, it was contingent on the American Healthcare Act or the Obamacare marketplaces. What it did was it set up programs where small business owners would let their employers buy individual insurance and using Oscar's platform, the employer would basically reimburse the individual for it, and that would allow them to meet their compliance for insuring their customers, while giving them — their employees, excuse me,— while giving them more options and actually was a way of relatively controlling costs because there were some subsidies related to using the marketplaces.

It kinda worked for a while, but when the marketplaces, ObamaCare marketplaces are doing well. But many insurers have left that program, and it’s been walking in the woods, trying to figure out what it wants to do next, and figure this out, and it’s starting to gain traction here. It's now more focused on providing individual insurance themselves, taking more of the underwriting burden, and so far, they've done a decent job. Their combined ratios are, have been varying. I think their health loss ratios were 70% in the most recent quarter, combined ratios 87, 88, which by insurance standards, is quite good. Any insurance, almost any line that you're looking at, below a 90% coverage loss ratio, which is basically how much you have to pay out in costs for healthcare or auto claims or anything like that, relative to the premium bring in. It's basically saying you have a 10% operating margin. Industry lingo. I know it's silly, but it works pretty well for an insurer.

Despite the fact that they've been winding down some big-name programs, they had a program with Cigna that didn't quite work out. They've been focusing more on the individuals. It seems to be working. I'm not saying they're out of the woods yet, and I'm not wholeheartedly going to pound the table to say, this is an awesome company now, but it's very interesting to see and obviously the stock is reflecting the fact that they are getting some traction with what they're doing. Coming up next, we're going to get into listener questions about all these massive IPOs coming to market.

Hey, just a reminder, we love answering your questions. If you do want your question answered on air, go ahead and email us at podcasts @fool.com. Three rules as always. No. 1, keep it Foolish, two keep it short enough for us to read, and three, we cannot give personalized advice, so let's try to keep it relatively generic.

As long as we've been taking questions, what we have seen more than anything else so far is questions about SpaceX, Anthropic and OpenAI IPOs, specifically to how they're going to impact the broader market. We're talking about early index inclusion for a lot of these companies because they're going in so big, and the questions have been numerous. But there's just two that are most representative of what we're talking about. This was from Ben Jackson. "With the recent changes to the Nasdaq index and immature over to value companies like SpaceX IPO with little supply — he's being a little diminutive here — but should your average ETF investor or index investor be reconsidering or selling their ETF portfolio to avoid the long-term turbulence that these large IPOs going into these ETFs may cause. This one is from Thomas Bianco. If we already know that approximately $4 trillion of new money will be sucked up in these three IPOs, basically, the combined market value, they think is going to be around $4 trillion for all three of them when they go public, How can we adjust our current equities positions to account for these forthcoming disruptions?

Now, I want to just give a little bit of context here because all the money we're going to be sucking up with these large ones. Right now, data from the Federal Reserve of St. Louis says that about $8.1 trillion is in money market funds as of fourth quarter of 2025. That sounds like a lot, but you also have to factor, how much is in the market in general. We have a thing at The Motley Fool. It’s called the PT potential growth indicator. Basically, it takes all the cash that's on the sidelines or in money market accounts, like the Fred data says and then divided by the total stock market valuation, which is at about 10.1%. Over the past 30 years, that is a little bit on the lower side. You could say that that's saying, everyone's pretty optimistic. They want to be in the market relative to what we see in other different times. With those little factoids, the amount of money that we're talking about here, guys, what do you have to say to Ben and Thomas' questions here?

Lou Whiteman: I think the first thing we should note is that the IPO headline number isn't the same as the money raised. SpaceX is looking for a $1.8 trillion IPO valuation, but it's only actually raising 75 billion. That said, 75 billion is a massive number for an IPO. I think the point is still relevant. The net impact, though, I'm not sure what I think. It might suck money away from other areas because again, we have a lot of demand here. $75 billion worth of money has to be found here. But over the next six months, billions of dollars in SpaceX stock is going to be unlocked and free to trade. These are people who got in before the IPO. If those insiders decide to sell, that could free up at least 75 billion, if not more for other opportunities that could impact other stocks in a positive way. That actually could be a positive impact in some ways, Tyler. Bottom line, though, is the only thing we know for certain is it's going to cause volatility. I personally am not going to reposition things or do anything in anticipation of this. I think that, yes, there could be volatility, but over time, I think this will balance itself out as a long term focused investor. I'm not going to lose sleep on this, I'm going to just make some popcorn and watch.

Matt Frankel: As Lou said, the money raised won't be in the trillions of dollars, but the latest forecast is for around 240 billion across those big three, SpaceX, Anthropic, and OpenAI. Just to put that in context, in 2025, the entire IPO market, all companies raised about $45 billion combined. The largest U.S. IPO previously raised about 22 billion. We are in uncharted territory. There’s plenty of money on the sidelines, as Tyler mentioned, the money market accounts, but the reality is that a lot of money flowing into these three IPOs is going to have to come from somewhere, and existing stock investments are probably going to be a big source. Specifically, I would think that most people are going to sell Magnificent 7 shares to invest in some of these. No one's going to sell their realty income stock to buy SpaceX is my point there. Tesla could be an interesting one to watch. A lot of Elon Musk fans could sell one Elon Musk stock to buy another.

But on the other hand, there is a case to be made that there's going to be a lot of new money flowing into the market this year, not just because of these IPOs. These IPOs are certainly increasing the overall interest in the stock market by retail investors. As we're recording this, I actually got a notification from my broker that the SpaceX IPO is available. A lot of people are taking notice. It's going to be an interesting year for sure. All three could create significant short-term volatility, but like Lou said, I'm not losing sleep over it. I think it's going to work itself out in the long term, and I'm not planning on buying any of these three on Day 1, at least.

Tyler Crowe: Feel like we're probably all going to get that SpaceX email from our brokers in the next week or so I want to just actually conclude with this, too, about ETFs and allocations and things like that. This is an important thing for people to consider when they're buying ETFs. Say you're buying a broad-based S&P 500 ETF, there are two different types. There are market cap-weighted ones, which is obviously the ones that are going to be most influenced here by the large amount of money going into them. But there's also equal-weight CAP or equal-weighted indices as well, where instead of doing market cap as, it's every single company at every equal weights. It's pretty self-explanatory. Ones like this are obviously going to probably see less volatility relative to these trades. If you are looking to get broad exposure to an entire market, but are perhaps more skittish, I guess you could say, of these mega-cap companies coming in and becoming a larger and larger portion of what's supposed to be a broad-based index. There are equal-weight index options out there that might be worth considering.

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show. Thanks to producer Dan Boyd and the rest of the team for Lou, Matt, myself, thanks for listening, and we'll chat again soon.

Lou Whiteman has positions in Taiwan Semiconductor Manufacturing and XPO. Matt Frankel, CFP® has no position in any of the stocks mentioned. Tyler Crowe has positions in Ryman Hospitality Properties. The Motley Fool has positions in and recommends Broadcom, CrowdStrike, Nvidia, Old Dominion Freight Line, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends Ryman Hospitality Properties and XPO. The Motley Fool has a disclosure policy.