Leveraged Broadcom ETFs captured opposite sides of the chip company’s post-earnings selloff, with the Direxion Daily AVGO Bear 1X Shares (AVS ) climbing 9.7% over the past five days as investors questioned the pace of AI growth despite the company’s $73 billion backlog.
AVS gained as Broadcom shares tumbled following Thursday’s earnings call, while the Direxion Daily AVGO Bull 2X Shares (AVL ) dropped 33% over the same period. The funds magnify daily moves in Broadcom Inc. (AVGO) for traders betting on short-term direction.
Broadcom reported fourth-quarter earnings per share of $1.95 on revenue of $18.02 billion Thursday, beating analyst estimates of $1.86 and $17.49 billion, according to CNBC reporting. The company forecast first-quarter revenue of $19.1 billion, above the $18.3 billion consensus estimate.
CEO Hock Tan said in a statement that Broadcom expects AI chip sales to double year-over-year to $8.2 billion in the current quarter, CNBC reported. The company also raised its quarterly dividend 10% to 65 cents per share.
Despite the beat, Broadcom shares fell as much as 12% Friday after Tan’s commentary about the company’s AI backlog left some investors wanting more details, Bloomberg reported. The company disclosed a $73 billion backlog of AI product orders shipping over the next six quarters. However, it didn’t provide a full-year AI revenue forecast.
“Momentum appears to be intact for Broadcom with Q1 AI revenue expected to double year-over-year,” said Jake Behan, head of capital markets at Direxion. “Between the dividend increase and growth expectations, this reads as a very disciplined report from Broadcom.”
Earnings Volatility Draws Traders
AVL holds $136 million in assets. It has pulled in $12.5 million in net inflows over the past month, according to ETF Database. The fund delivers 200% of Broadcom’s daily returns. That makes it a tool for traders with short-term bullish views on the stock.
“With options pricing in a swing of nearly seven percent after earnings, traders looking to play the move may find Direxion’s AVL and AVS ETFs as surgical vehicles to play that volatility,” Behan said.
The company revealed during its earnings call that AI startup Anthropic was the customer behind a previously announced $10 billion order for Google’s tensor processing units, which use Broadcom designs, CNBC reported. Broadcom also disclosed an $11 billion order from Anthropic in the fourth quarter.
AVS bets against Broadcom on a daily basis. It held $13.5 million in assets and pulled in $3.5 million in inflows over the past month, according to ETF Database.
“Broadcom’s run has come so far and so fast this year that even a solid report could end up seeing profit taking,” Behan said. “At this stage in the game, traders don’t need much of an excuse to lock in gains.”
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