Broadcom heads into its September 2 earnings report down another leg, now at $356.74 — a further 6% drop on the week — with seven trading days of price weakness compounding onto a stock already 25% below its pre-June earnings close.
The pace of the decline is worth pausing on. The previous note documented a measured drift lower rather than a disorderly flush. That characterisation is being tested. Tuesday's close of $356.74 is below the mid-week lows that the prior report flagged as a floor. MRVL managed to gain 11% over the same week. AOSL and CEVA fell 6.2% and 8.7% respectively, tracking closer to AVGO's pace, but neither carries the same earnings catalyst overhang. The semi tape is under pressure broadly, yet AVGO is again underperforming the names it correlates most tightly with — a pattern that has now run for three consecutive weeks.
Short sellers are not the source of the pressure, and that remains the clearest structural contrast in the data. Short interest has continued its retreat, now down to 1.2% of the free float — off nearly 20% from a month ago and 5% lower just this week. Borrowing costs are essentially nil at 0.30%, and availability remains completely unconstrained. The borrow market is saying nothing alarming about Broadcom; it is the long side that is moving. That distinction matters heading into an earnings print: a short squeeze is not in play, but neither is there obvious forced selling from the borrow side. Whoever is selling is doing so by choice, not necessity.
The Street's positioning has firmed slightly at the edges. RBC Capital reiterated its Sector Perform on Tuesday with a $400 target — sitting 12% above the current price but well below the consensus mean of $526. BMO Capital's Outperform initiation last Friday at $455 now also looks more relevant, given the stock has slid another 3% through the week since that was filed. The broader analyst community holds a more constructive view: JPMorgan's Overweight carries a $580 target, and BofA is at $530 — both set after the June earnings shock. The bull case centres on Broadcom's custom AI accelerator franchise and VMware software conversion, while the bear case focuses on gross margin compression of around 300 basis points in Q3 due to product mix, and concentration risk in the Google relationship. At a trailing PE of 23.8x and EV/EBITDA of 19x, the multiple has compressed meaningfully from its early-year highs, but the stock is still not cheap relative to what the next print needs to deliver.
Insiders have been consistent sellers through the summer. The Chief Legal Officer sold 75,000 shares across three tranches in June and July at prices ranging from $373 to $401. Chairman Henry Samueli sold over 176,000 shares on June 24 alone, generating roughly $67 million in proceeds. The 90-day net selling runs to approximately $281 million. None of these are panic trades — Samueli's position barely moved, and the CLO sales look programmatic — but the direction is unambiguous. No insider has been a net buyer in the available window.
The earnings history is the single number that shapes everything else heading into September 2. The last two Q-prints each dropped double digits on the day: the June report erased 13% in the session and 23% over the following five days. The prior release fell 19.5% on the day. Options market positioning is unusually subdued given that backdrop — the put/call ratio of 1.07 is just below its 20-day average of 1.08, with a z-score barely negative. That is a notably muted hedging posture for a stock with a two-print track record of losing double digits after results. Either the market believes this quarter is different, or the hedges are being structured elsewhere. The September 2 report is the number to watch: not just the revenue line or AI revenue share, but whether gross margins come in above or below that flagged 300-basis-point compression.
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