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IBD 50’s Broadcom Jumps Into Buy Range, Ambarella Down On Earnings

Apple ( AAPL ) supplier and IBD 50 list growth stock  Broadcom ( AVGO ) opened sharply up Friday, jumping into buy range. Thursday afternoon the company’s  quarterly report beat estimates  despite slowing iPhone sales. In midmorning trading Friday Broadcom was up 6%, near 146 — putting it now at the top of buy range from a double-bottom base with a buy point of 138.79. Several high-rated chipmakers have been approaching buy zones lately with the market returned to an uptrend, including the two chipmakers on the IBD 50 list: Broadcom and Nvidia ( NVDA ), which makes chips for computation-intensive processes including graphics, gaming and self-driving cars. Ambarella ( AMBA ) stock was down more than 5% in the stock market today , after the maker of image-processing chips issued disappointing revenue guidance Thursday afternoon while topping views for its fourth quarter. Friday analysts lifted price targets for Broadcom and lowered them for Ambarella. Ambarella is a supplier to action-camera maker GoPro ( GPRO ), which was trading up more than 5% Friday. It’s down about 21% this year. “During the fourth quarter we saw strong sales from professional IP security, automotive aftermarket, home monitoring and flying camera markets,” Ambarella CEO Fermi Wang said in the company’s earnings release. “This was largely offset, however, by a continued decline in the wearable sports camera market.” Ambarella is working to diversify its end markets and customer base. For its Q4 ended Jan. 31, Ambarella said revenue rose 5% from the year-earlier quarter to $68 million, and earnings per share fell 5.9% to 64 cents. That beat the view of analysts polled by Thomson Reuters, who on average expected EPS of 48 cents on revenue of $66 million. But Ambarella gave lagging guidance for its fiscal Q1 2017. It sees revenue of $55 million to $57 million and net income of $8 million to $10 million. Analysts polled by Thomson Reuters have been expecting revenue of $62 million, and net income of just over $14 million. Ambarella gets an IBD Composite Rating of 74 and Broadcom a 98 out of a possible 99, factoring in a variety of metrics such as earnings growth and stock-price gains. RELATED: Can IBD 50’s Broadcom Drive Chip Stocks?

Chipmaker Earnings Surprises Send Ambarella, Broadcom Opposite Ways

Ambarella ( AMBA ) stock was down nearly 6% in after-hours trading Thursday, after the maker of image-processing chips issued disappointing revenue guidance while topping views for its fourth quarter. Apple ( AAPL ) supplier and IBD 50 list growth stock  Broadcom ( AVGO ) was up more than 7%, however, after its quarterly report beat estimates  despite slowing iPhone sales. Ambarella, which rose 2.2% in Thursday’s regular session, is a supplier to action-camera maker GoPro ( GPRO ). “During the fourth quarter we saw strong sales from professional IP security, automotive aftermarket, home monitoring and flying camera markets,” Ambarella CEO Fermi Wang said in the company’s earnings release. “This was largely offset, however, by a continued decline in the wearable sports camera market.” Ambarella is working to diversify its end markets and customer base. For its Q4 ended Jan. 31, Ambarella said revenue rose 5% from the year-earlier quarter to $68 million, and earnings per share fell 5.9% to 64 cents. That beat the view of analysts polled by Thomson Reuters, who on average expected EPS of 48 cents on revenue of $66 million. But Ambarella gave lagging guidance for its fiscal Q1 2017. It sees revenue of $55 million to $57 million and net income of $8 million to $10 million. Analysts polled by Thomson Reuters have been expecting revenue of $62 million, and net income of just over $14 million. Ambarella gets an IBD Composite Rating of 74 and Broadcom a 98 out of a possible 99, factoring in a variety of metrics such as earnings growth and stock-price gains. Several high-rated chipmakers have been approaching buy zones lately with the market returned to an uptrend, including the two chipmakers on the IBD 50 list: Broadcom and Nvidia ( NVDA ), which makes chips for computation-intensive processes including graphics, gaming and self-driving cars. Broadcom ended Thursday’s regular trading session about 9% under a buy point from a cup base. RELATED: Can IBD 50’s Broadcom Drive Chip Stocks?

Can IBD 50’s Broadcom Drive Chip Stocks As Earnings Approach?

Loading the player…   With the rising Internet of Things, connected cars and cloud computing all fostering chipmaker growth, Nvidia ( NVDA ) and Broadcom ( AVGO ) make the IBD 50 list of top-ranked growth stocks. Broadcom is set to report quarterly earnings Thursday after the market close, and it could serve as a bellwether for several other chip stocks that have moved up to or past their 50-day lines in the past couple weeks as the stock market has improved. Broadcom and Nvidia are top-ranked, with IBD Composite Ratings of 98 and a best-possible 99, respectively. Broadcom, which merged with Avago Technologies in February and kept the latter’s stock symbol “AVGO,” moved up for five straight days before pulling back 1% in the stock market today . After the market rout last month, Nvidia has risen 30% since Feb. 11, and Avago has added 18%, compared to the S&P 500 index’s 9% gain. Broadcom is still down 6% for the year, and Nvidia is flat, while the S&P has declined 3%. Analysts are looking for earnings per share of $2.30 for Broadcom’s fiscal 2016 first quarter, on revenue up 6% to $1.75 billion. Nvidia’s latest quarter, reported in February, brought 12% revenue growth with gains across all market platforms that the company serves: gaming, professional visualization, data center and automotive. Chips Go In Cars, Cloud And Consumer Electronics Both Broadcom and Nvidia serve a variety of industries, and they’re both Apple ( AAPL ) suppliers. One growing field for both is connected cars, as automakers add more entertainment and information technology, and as vehicles move closer to self-driving. At the Geneva International Motor Show underway this week, Daimler ( DDAIF ) showed off a self-braking and self-parking Mercedes E-Class. Tesla Motors ( TSLA ) is also there, and its Autopilot technology recently made an MIT Technology Review list of the top 10 technology developments for 2016. Several other chipmakers playing in car tech, among other fields, have recovered to or above their key 50-day lines in the past couple weeks. Though not as highly rated by IBD as are Nvidia and Broadcom, they include Skyworks Solutions ( SWKS ) with an 81 Composite Rating, Ambarella ( AMBA ) with a 74, Qorvo ( QRVO ) with a 63, and NXP Semiconductors ( NXPI ) with a 67. In all, Broadcom supplies analog and digital chips for uses such as data center networking, home connectivity, broadband access, telecom equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems, and displays. Apple’s varying iPhone sales will be a factor for Broadcom. “Given an uncertain demand environment within storage and the recent iPhone inventory correction,” Pacific Crest Securities analyst John Vinh wrote in a research note, “we see limited revenue upside opportunities. However, we expect investors to look through to the ramp of the iPhone 7, where we anticipate over 20% content gains.” Sterne Agee analyst Doug Freedman said in a research note that Broadcom is his 2016 top-pick idea, “as we believe the smartphone weakness is well reflected in estimates and will likely be more than offset by the consolidated business outlook going forward.”