Broadcom plunge drags down NASDAQ, but Dow Jones surges on lower Oil

The US stock market is of two minds on Thursday, and that means the Dow Jones Industrial Index (DJIA) and NASDAQ 100 (NDX) are moving in opposite directions.

First, there's Broadcom (AVGO). The eighth-largest holding in the NASDAQ 100 plunged 14% at the open on Thursday following its fiscal Q2 earnings late Wednesday that beat Wall Street consensus. The culprit appears to be a failure to raise its AI target for the next fiscal year.

Then there's the US House of Representatives' vote to end the Iran war. While the Congress still needs the Senate to follow through with its own vote, which might not be forthcoming, it's a sign that Washington's timeline for continuing the war is not open-ended. Four Republican House members joined Democrats to vote in favor of the legislation.

Separately, Israel agreed to a ceasefire with Hezbollah in Lebanon, but the latter dismissed the overture due to Israel's requirement that Hezbollah evacuate from the southern part of Lebanon.

Oil (WTI) still sold off, however, trading down more than 3% below $93 at the Wall Street open. US Treasury yields also pulled back across the curve, which boosted the DJIA to gain more than 1% at the open. The NASDAQ 100 opened 1.3% lower.

Broadcom stock sells off despite incredible growth

Broadcom reported adjusted earnings per share (EPS) of $2.44 on revenue of $22.19 billion. That was $0.04 better than consensus on the bottom line and $70 million on the top line.

But the market seems to be less enthused by the fact that CEO Hock Tan kept its AI target at 10 GW in fiscal 2027 instead of raising guidance like in prior quarters.

Still, revenue rose 48% overall in Q2, aided by 143% growth in its AI semiconductor segment. CEO Tan says that figure will hit 200% YoY growth in Q3, so it's not like Broadcom is slowing down.

For the fiscal third quarter, which ends in August, Tan projected that overall revenue would rise to $29.4 billion, ahead of the $28.5 billion consensus.

Broadcom stock chart

Broadcom easily ditched the 20-day Simple Moving Average (SMA) on the daily chart. Now traders will watch to see if the 50-day SMA near $397 can hold the line.

AVGO stock is trading within the support band that began in mid-April and ranged from $400 to $410. A break below $400 should send AVGO at least to $380, a price level that acted as resistance last December and again in April.

Until Broadcom stock can retake and hold the 20-day SMA, there's slim chances of an uptrend retaking shape.