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Broadcom Inc (NASDAQ:AVGO) truly stood out as a remarkable performer. After the chipmaker presented stronger-than-expected guidance for the current quarter, its shares witnessed a significant upward trajectory. This surge had a domino effect on other chipmakers as well.

"Broadcom's Strong Guidance and Market Resonance"

Broadcom's Aftermarket Performance

Broadcom’s shares soared an impressive 15.8% in aftermarket trade, reaching an indicated record high of $209.10. The reason behind this remarkable gain was its forecast of higher-than-expected revenue for the current quarter. This was attributed to the increased chip demand driven by the growing interest in artificial intelligence. Despite softer-than-expected quarterly revenue, the upbeat forecast and optimistic comments from executives during the earnings call led investors to largely overlook this aspect. Moreover, Broadcom's earnings per share exceeded estimates, further fueling its upward momentum.

Impact on Other Chipmakers

The gains in Broadcom didn't remain confined to itself. They spilled over into other chipmakers, helping them recover a significant portion of Thursday's losses. For instance, NVIDIA Corporation (NASDAQ:NVDA) rose 1.1%, while AMD (NASDAQ:AMD) added 0.7%. This shows the ripple effect that a strong performer like Broadcom can have on the entire chipmaking sector.

Market Sentiment and Fed Meeting

Wall Street indexes faced a setback on Thursday as stronger-than-expected producer price index inflation data raised concerns about the long-term outlook for rates. Investors, looking to lock in some recent profits, pulled Wall Street indexes off their record highs ahead of the Fed meeting next week. This was particularly evident in technology shares, which had witnessed a strong run-up in recent weeks. Although the Fed is widely expected to cut rates by 25 basis points next week, the sticky PPI and consumer inflation data released this week stoked fears that the central bank might adopt a slower pace of cuts in 2025. As a result, the S&P 500 fell 0.5% to 6,051.25 points, the NASDAQ Composite fell 0.7% to 19,905.19 points, and the Dow Jones Industrial Average fell 0.5% to 43,914.12 points.

Broadcom's 2024 Performance

Broadcom is trading up over 60% for 2024, and this remarkable growth can be attributed to the increased AI-fueled demand for its network equipment. Its network equipment plays a crucial role in setting up the infrastructure for the industry, and this has been a major driver of its success. The company has been able to capitalize on this trend and emerge as a leader in the chipmaking space.