Your Portfolio in Brief—Broadcom (AVGO)
Broadcom released strong results this week, confirming the continued strength in demand for infrastructure tied to artificial intelligence. In an environment where investors have begun questioning the pace and profitability of massive AI investments, the company delivered a quarter that exceeded expectations while also raising its outlook for the coming months.
For the first quarter of its fiscal year, Broadcom reported adjusted earnings of $2.05 per share on revenue of $19.31 billion, compared with consensus expectations of roughly $2.02 per share and $19.21 billion in revenue. The performance highlights the company’s strong operational momentum, particularly within its semiconductor segment dedicated to artificial intelligence.
Management also surprised markets positively by guiding for approximately $22 billion in revenue for the upcoming quarter, significantly above analyst expectations of roughly $20.4 billion. This outlook suggests continued strong visibility into demand from large data centres and major cloud providers.
________________________________________
Artificial Intelligence Remains the Primary Growth Driver
Broadcom’s growth continues to be strongly supported by AI. During the quarter, revenue from AI-related semiconductors reached $8.4 billion, representing an impressive 106% year-over-year increase. This surge reflects robust demand for custom AI accelerators (ASICs) as well as high-performance networking solutions used in modern data centres.
For the current quarter, the company expects AI semiconductor revenue to reach approximately $10.7 billion, illustrating how quickly this segment is expanding within Broadcom’s overall business model.
Unlike some players in the sector that rely primarily on graphics processors, Broadcom benefits from a more diversified position within the AI ecosystem. The company provides not only specialized computing chips but also the critical infrastructure components that allow systems to operate efficiently at scale, particularly in networking and connectivity solutions.
________________________________________
A Strategic Partner for Major Cloud Providers
Broadcom is also establishing itself as a key technology partner for several hyperscale cloud companies developing their own custom chips. Firms such as Alphabet and Meta are increasingly designing in-house semiconductors to optimize costs and performance for artificial intelligence workloads.
In this context, Broadcom plays a strategic role by helping transform these chip designs into functional silicon and enabling large-scale production. This expertise positions the company as a credible partner in the custom silicon ecosystem, reinforcing its relevance across the global technology infrastructure landscape.
________________________________________
Continued Financial Discipline
Alongside its growth, Broadcom announced authorization for a share repurchase program of up to $10 billion. This decision reflects the company’s strong cash generation and management’s confidence in the long-term outlook of the business.
Broadcom also benefits from a diversified model combining semiconductors and infrastructure software, including private cloud platforms, cybersecurity solutions, and enterprise software. This diversification helps stabilize revenue streams while supporting the company’s ability to return capital to shareholders.
________________________________________
Conclusion
In an environment where markets are increasingly distinguishing between the winners and losers of the artificial intelligence revolution, Broadcom continues to demonstrate that it belongs firmly among the companies best positioned to benefit from this transformation. The rapid growth of its AI-related revenue, the visibility provided by partnerships with major cloud providers, and its consistent ability to generate strong cash flows all reinforce the strength of its business model.
Beyond the quarterly performance, it is Broadcom’s strategic position within global technology infrastructure that stands out. Massive investments in data centres, high-performance networking, and specialized chips are expected to continue driving demand for its solutions in the years ahead.
At Pratte Portfolio Management, we view Broadcom as a key player in this next phase of technological growth. The company combines innovation, financial discipline, and direct exposure to the major structural trends shaping the technology sector, elements that remain essential for long-term value creation within our portfolios.
The stock ended Thursday’s session up 4.79% at $332.74, supported by better-than-expected results and strong outlook for its artificial intelligence–related activities. Despite some volatility since the start of the year, the shares are still up more than 70% over the past twelve months, illustrating market confidence in Broadcom’s strategic position in next-generation technology infrastructure and data centres.
________________________________________
Markets in brief
Monday
• S&P 500:6,881.62 (+0.04%)
• Nasdaq Composite: 22,748.86 (+0.36%)
• Dow Jones Industrial Average: 48,904.78 (−0.15%)
• S&P/TSX Composite (Toronto): 33,942.86 (+0.47%, +157.92)
________________________________________
Canadian Dollar
The Canadian dollar was little changed against the U.S. dollar in a session largely driven by oil price volatility and a temporary increase in risk aversion following geopolitical tensions in the Middle East.
________________________________________
Markets began the week under pressure after the United States and Israel carried out military strikes on Iran over the weekend. At the open, Wall Street reacted sharply, with major indices falling more than 1% as investors assessed the potential economic consequences of an escalating conflict in a key energy-producing region.
However, sentiment improved steadily throughout the session. The major indices recovered most of their losses as investors stepped in to buy the dip, particularly in large-cap technology companies seen as more resilient in periods of geopolitical uncertainty.
According to Angelo Kourkafas, investment strategist at Edward Jones, U.S. investors have become conditioned over the past fifteen years not to overreact to geopolitical headlines. This pattern was evident again Monday: an initial selloff followed by a quick stabilization and renewed buying interest.
Another structural factor helped stabilize markets. The U.S. economy is now a net exporter of petroleum products, which reduces its vulnerability to oil price spikes compared with previous decades.
Oil prices surged earlier in the day amid concerns that the conflict could disrupt traffic through the Strait of Hormuz, one of the most critical chokepoints for global crude exports. A prolonged disruption there could significantly affect global energy supply and inflation dynamics.
For now, however, the market’s base case assumes the shock will be temporary. Many strategists expect oil prices to stabilize once the initial geopolitical reaction fades unless the conflict escalates significantly.
Economic data also provided support to the rebound. The ISM manufacturing index for February came in slightly better than expected, helping offset some of the geopolitical uncertainty and encouraging buyers to step back into the market.
The bond market reacted more decisively. Investors adjusted expectations for inflation risks tied to higher energy prices. The yield on the 10-year U.S. Treasury rose to 4.04%, up from 3.94% on Friday, while the 2-year yield climbed to 3.48% from 3.38%.
This move reflects concerns that sustained energy price increases could complicate the Federal Reserve’s policy path if inflation pressures were to reaccelerate.
________________________________________
Stocks in Brief
• Nvidia (NVDA): +3%—strong rebound as investors bought leading AI names during the early selloff.
• Microsoft (MSFT): +1%—large-cap technology stocks attracted flows as defensive growth plays.
• Chevron (CVX): +1.47% to $189.60—energy stocks benefited from the rise in oil prices.
• Exxon Mobil (XOM): +1.11% to $154.22—gains across the oil sector amid geopolitical tensions.
• Lockheed Martin (LMT): +3.37% to $676.70—defence contractors rallied as investors anticipate higher military spending.
• RTX (RTX): +4.71% to $212.16—sector strength driven by rising geopolitical risk.
• Northrop Grumman (NOC): +6.02% to $768.02—strong demand for defence stocks.
• Palantir (PLTR): +5.81% to $145.17—investors betting on expanded government and defence contracts; more than 40% of revenue came from government clients in the latest quarter.
• AeroVironment (AVAV): −19%—sharp drop after losing exclusivity on a major U.S. Space Force contract.
• Berkshire Hathaway (BRK.B): −5%—shares fell following weaker earnings, particularly in the insurance segment.
• AES (AES): −17.77% to $14.21—plunged after announcing a takeover by a consortium led by BlackRock and EQT, valuing the company at roughly $11 billion.
________________________________________
Sector Performance
U.S. markets showed a clear sector rotation during the session:
• Energy—supported by higher crude prices.
• Industrials/Defence—gains driven by expectations of increased military spending.
• Technology—rebound led by megacap stocks as investors bought the dip.
Conversely, sectors tied to travel, consumer discretionary, and tourism remained under pressure amid concerns that higher fuel prices and geopolitical instability could weigh on global travel demand.
________________________________________
Tuesday
• S&P 500:6,816.63 (−0.94%)
• Nasdaq Composite: 22,516.69 (−1.02%)
• Dow Jones Industrial Average: 48,501.27 (−0.83%, −403.51 points)
• S&P/TSX Composite (Toronto): 33,784.94 (−2.19%, −756.33 points)
________________________________________
Canadian Dollar
The Canadian dollar traded at 73.08 US cents, slightly higher than 73.06 US cents the previous session.
________________________________________
Markets endured another volatile session Tuesday as investors continued to digest the escalating conflict between the United States, Israel and Iran. The war entered its fourth day, and the steady flow of geopolitical headlines kept investors on edge throughout the session.
At one point early in the day, the selloff intensified sharply. The Dow Jones dropped more than 1,200 points intraday, while the S&P 500 briefly fell about 2.5% and the Nasdaq nearly 2.7%, reflecting the degree of uncertainty surrounding the geopolitical situation and its potential economic consequences.
According to Peter Cardillo of Spartan Capital Securities, markets are now reacting to virtually every headline related to the conflict. The escalation intensified Tuesday after Iran launched attacks on U.S.-linked sites in the Gulf while Israel continued strikes on Iranian and Lebanese targets.
A key source of concern for investors remains the closure of the Strait of Hormuz, one of the most critical chokepoints in global energy trade. Roughly 20% of the world’s oil and gas flows through the strait, and disruptions to shipping traffic have already pushed energy prices sharply higher.
Crude oil surged again Tuesday. Brent crude rose about 4.7%, while WTI gained roughly 4.7% as well, after both benchmarks had already jumped around 6% the previous day. At their intraday peaks, oil prices had risen more than 9%, highlighting the severity of the supply shock markets are attempting to price in.
The spike in energy prices has revived concerns about inflation just as investors were expecting the Federal Reserve to move toward further rate cuts later this year. According to Patrick O’Hare of Briefing.com, the conflict introduces a clear inflationary risk for the U.S. economy if higher energy costs persist.
Jose Torres of Interactive Brokers also noted that the surge in oil prices could complicate expectations for monetary easing, since higher energy costs may pressure corporate margins and delay the Federal Reserve’s path toward lower interest rates.
Treasury yields initially surged alongside oil prices before stabilizing later in the session. The yield on the 10-year U.S. Treasury briefly spiked before easing back toward 4.06%, compared with 4.03% at Monday’s close.
Markets received some relief midday after Donald Trump indicated that the U.S. Navy could escort oil tankers through the Strait of Hormuz if necessary, signalling that Washington may intervene to ensure the continued flow of global energy supplies.
Even so, volatility remains elevated. The CBOE Volatility Index (VIX) climbed to its highest level since November, reflecting the heightened uncertainty surrounding the conflict and its potential impact on inflation, interest rates and economic growth.
________________________________________
Stocks in Brief
• Nvidia (NVDA): −1.33% to $180.05—semiconductor stocks retreated as risk appetite faded.
• Micron (MU): −7.99% to $379.68—memory chip makers were among the session’s worst performers.
• AMD (AMD): −3.86% to $190.95—broader weakness across the semiconductor sector.
• Lockheed Martin (LMT): −1.27% to $667.82—defence stocks pulled back after Monday’s rally.
• RTX (RTX): −2.65% to $206.52—similar reversal across defence contractors.
• Northrop Grumman (NOC): −1.09% to $759.11—profit-taking in the sector after earlier gains.
• Exxon Mobil (XOM): −1.55% to $151.83—energy stocks retreated despite elevated oil prices.
• Chevron (CVX): −0.45% to $188.77—modest decline after the previous session’s surge.
• Target (TGT): +6.78% to $120.84—investors focused on the company’s improved growth outlook for 2026 despite mixed quarterly results.
• Best Buy (BBY): +7.06% to $65.94—shares climbed after earnings showed stronger profitability.
• Pinterest (PINS): −9.61% to $23.41—the stock dropped even after activist fund Elliott Management disclosed a roughly $1 billion stake in the company.
________________________________________
Sector Performance
Selling pressure was broad-based across markets Tuesday:
• Materials, Industrials and Consumer Discretionary led declines as investors priced in the economic impact of higher oil prices and borrowing costs.
• Semiconductors and technology hardware were also under pressure amid the broader risk-off tone.
• Energy and defence, which had outperformed the previous session, also pulled back as traders took profits.
Overall, the session reflected a market still highly sensitive to geopolitical developments, energy prices and interest rate expectations, with volatility likely to remain elevated as the Middle East conflict evolves.
________________________________________
Wednesday
• S&P 500:6,869.50 (+0.78%)
• Nasdaq: 22,807.48 (+1.29%)
• Dow Jones: 48,739.41 (+0.49%, +238.14 points)
• S&P/TSX Composite (Toronto): 33,942.86 (+0.47%, +157.92 points)
________________________________________
Canadian Dollar Movement
The Canadian dollar remained relatively stable around 74 U.S. cents, as investors monitored both developments in the Middle East conflict and the U.S. economic data released during the session.
________________________________________
Wall Street ended Wednesday’s session higher as investors set aside inflation concerns related to the Middle East conflict following stronger-than-expected U.S. economic data.
The day before, markets had declined as oil prices surged and investors worried about the potential inflationary impact. On Wednesday, however, the stabilization of crude prices helped calm markets and supported risk appetite.
Geopolitical tensions nevertheless remain a central concern. The Strait of Hormuz, through which roughly 20% of the world’s oil supply flows, remains a key focal point in the current conflict. U.S. authorities indicated they could intervene to secure tanker traffic if necessary, a development that helped reassure investors about the continuity of global energy flows.
Several analysts also point out that the U.S. economy is now less vulnerable to oil shocks than in the past. The United States currently produces more than 13 million barrels of oil per day, reducing the risk of shortages and mitigating the potential impact of a prolonged energy price spike.
On the economic front, investors were also encouraged by several indicators released Wednesday.
Private sector job creation reached 63,000 in February, according to the ADP survey, a figure that exceeded economists’ expectations after a particularly weak January reading.
Activity in the services sector also proved stronger than expected. The ISM services index reached 56.1, signalling solid expansion in the U.S. economy and a pace of growth above market forecasts.
These data suggest that the U.S. economy remains relatively resilient despite geopolitical tensions and still-restrictive financial conditions.
In the bond market, yields continued to rise. The yield on 10-year U.S. Treasury bonds traded around 4.09%, compared with 4.06% the previous day and 3.94% before the Middle East conflict began. This increase reflects ongoing concerns about the potential impact of an energy shock on inflation and on the Federal Reserve’s policy path.
Investors are now awaiting the official U.S. employment report, scheduled for release Friday, which could influence expectations regarding the future trajectory of interest rates.
________________________________________
Stocks in Brief
• Moderna (MRNA): +16% to $57.80—strong gain after reaching an agreement resolving litigation related to its COVID-19 vaccine.
• CoreWeave (CRWV): +7.75% to $79.50—shares rose following the announcement of a multiyear partnership with AI startup Perplexity.
• Coinbase (COIN): +14.57% to $208.93—rallied as bitcoin climbed back above the $70,000 level.
• Robinhood (HOOD): +8.07% to $82.21—moved higher alongside the broader cryptocurrency market.
• Riot Platforms (RIOT): +8.11% to $16.53—crypto mining companies benefited from bitcoin’s rebound.
• Ross Stores (ROST): +8.03% to $213.52—gained after reporting quarterly results that exceeded analysts’ expectations.
• Micron (MU): +5%—semiconductor stocks rebounded as risk appetite returned to the market.
• AMD (AMD): +5% — advanced alongside the broader chip sector.
________________________________________
Sector Performance
Wednesday’s session was marked by a return of risk appetite and a rebound across several sectors:
• Consumer discretionary: strong gains, supported notably by Ross Stores and a rebound in several consumer-spending related stocks.
• Technology and semiconductors: notable gains driven by the rebound in large-cap tech companies.
• Communication services: moved higher alongside the technology sector.
• Financials and industrials: moderate gains.
Conversely, defensive sectors such as utilities and consumer staples edged lower as investors favoured a more cyclical positioning amid improving market sentiment.
________________________________________
Thursday
• S&P 500: 6,830.71 (−0.56%)
• Nasdaq: 22,748.99 (−0.26%)
• Dow Jones: 47,954.74 (−1.61%, −784.67 points)
• S&P/TSX Composite (Toronto): 33,609.97 (−0.98%, −332.89 points)
________________________________________
Stock markets ended Thursday’s session in negative territory as geopolitical tensions in the Middle East continued to fuel investor uncertainty.
The conflict involving the United States, Israel, and Iran has now entered its sixth day, and the global energy situation remains particularly fragile. The Strait of Hormuz, a strategic passage through which roughly 20% of the world’s oil supply transits, remains heavily disrupted, further intensifying concerns in energy markets.
Against this backdrop, oil prices surpassed $80 per barrel, reaching their highest level in nearly two years. Since the start of the conflict, crude prices have risen by roughly 20%, raising fears of renewed inflationary pressures across the global economy.
According to Jose Torres of Interactive Brokers, investors are increasingly considering the possibility that inflation could reaccelerate if energy prices remain elevated for an extended period. A sustained rise in oil prices could quickly translate into higher consumer costs, particularly at the gasoline pump.
This dynamic could also complicate the trajectory of the U.S. Federal Reserve. While markets had recently expected several interest rates cuts this year, investors are now pushing those expectations further into the second half of the year.
Several strategists now believe the next rate cut could occur in the third quarter, potentially during the July or September Federal Reserve meetings.
Bond markets also reacted to the renewed inflation concerns. The yield on the 10-year U.S. Treasury rose to approximately 4.13%, compared with 4.10% the previous day and 3.94% before the conflict began.
Investors are now awaiting the release of the official U.S. employment report for February, a key indicator for assessing the strength of the American economy and the likely path of monetary policy.
However, some analysts believe the trajectory of oil prices could temporarily overshadow economic data if geopolitical tensions continue to intensify.
________________________________________
Stocks in Brief
• Broadcom (AVGO): +4.79% to $332.74—the stock advanced after reporting quarterly results that exceeded expectations and issuing strong revenue guidance for the upcoming quarter.
• The Trade Desk (TTD): +18.36% to $29.79—the stock surged following reports that OpenAI may be in discussions with the company regarding advertising opportunities.
• Victoria’s Secret (VSCO): −12.11% to $52.74—the stock declined despite stronger-than-expected results, as investors expressed concern about rising operating expenses.
• Berkshire Hathaway (BRK.B): +2%—the conglomerate moved higher after announcing the resumption of its share repurchase program for the first time since 2024.
• United Airlines (UAL): −7%—airline stocks fell as rising oil prices increased concerns about higher fuel costs.
• Delta Air Lines (DAL): −5%—the broader airline sector came under pressure amid the surge in energy prices.
• Nvidia (NVDA): −2.6%—the stock declined following reports that Washington may impose new restrictions on exports of artificial intelligence chips.
• AMD (AMD): −3.3% — semiconductor stocks broadly weakened amid similar regulatory concerns.
________________________________________
Sector Performance
Thursday’s session was largely driven by concerns related to energy prices and global economic growth.
• Materials and industrials were among the hardest-hit sectors as investors worried that persistently higher energy prices could slow economic activity.
• Airlines and transportation also faced significant pressure, given that fuel represents a major component of operating costs.
• Energy was one of the few sectors to benefit from the surge in oil prices, with several companies reaching new yearly highs.
• Technology showed mixed performance, as some software stocks rebounded after recent corrections while semiconductor manufacturers moved lower.
Overall, the session highlights a market that remains highly sensitive to developments in the Middle East and the potential implications for energy prices, inflation, and monetary policy.
________________________________________
Friday
• S&P 500: −1.6%
• Nasdaq: −1.6%
• Dow Jones: −1.9% (approximately −903 points)
________________________________________
Stock markets opened Friday’s session sharply lower, extending the week’s losses as investors reacted to a combination of unfavourable economic and geopolitical factors.
The main source of concern remains the surge in oil prices. U.S. WTI crude futures climbed above $89 per barrel, while Brent crude traded above $91, fuelled by fears of major disruptions to global energy supply related to the ongoing war between the United States and Iran.
Energy prices jumped after President Donald Trump stated that any agreement to end the conflict would only be possible with “unconditional surrender” from Iran, a comment that reignited concerns about a prolonged escalation.
Some energy officials are warning that the situation could become even more strained. Qatar’s energy minister indicated that Gulf producers may be forced to reduce production if the conflict persists, a scenario that could potentially push oil prices as high as $150 per barrel.
At the same time, markets were also shaken by the release of the U.S. February employment report, which came in weaker than expected.
Nonfarm payrolls declined by 92,000 jobs, whereas economists had expected an increase of roughly 50,000 positions. The unemployment rate also rose slightly to 4.4%, up from 4.3% the previous month.
This combination of rapidly rising energy prices and signs of slowing momentum in the labour market is fuelling concerns about a more challenging scenario for the global economy.
According to Angelo Kourkafas, strategist at Edward Jones, markets are currently in “risk-off” mode, as investors look to reduce exposure to riskier assets while the outlook for the Middle East conflict remains uncertain.
Despite these concerns, some analysts note that the U.S. economy is now less vulnerable to oil shocks than in the past. The United States has been a net exporter of oil since 2019, and the economy’s energy intensity has declined significantly over the past several decades.
________________________________________
Weekly Conclusion
Despite the volatility observed in the markets this week, largely driven by geopolitical tensions in the Middle East and the sharp rise in energy prices, it is important to place these movements in a longer-term perspective. Financial markets have historically demonstrated a strong capacity to adapt to geopolitical shocks and temporary increases in oil prices. In many cases, these periods of turbulence have been followed by a gradual stabilization once uncertainty begins to fade.
Investors also tend to react strongly to initial headlines, but experience shows that economic fundamentals and corporate earnings growth generally reassert themselves over time. Even in the current environment, several structural growth drivers remain firmly in place, particularly the continued investment in technological infrastructure, artificial intelligence, and large-scale data centres, which continue to support the growth of many high-quality companies.
Periods of volatility, while uncomfortable in the short term, can also create attractive investment opportunities for well-diversified portfolios.
We will continue to closely monitor geopolitical developments and energy markets, while remaining confident in the long-term growth prospects of high-quality companies and the structural trends supporting the global economy. Discipline, diversification, and a long-term investment horizon remain the most important allies for investors during periods such as this one.
