Broadcom and HPE Fall; Snowflake Surge

0:00AI is entering its most consequential phase where scale, safety and sovereignty will determine who leads and who lags, join Bloomberg Tech in London on November 2nd and 3rd as global leaders across business, finance and policy examined the defining trade-offs shaping the future of AI. Thank you to our presenting sponsor, Sarah's Force and Supporting Sponsors, IDA Ireland and Schneider Electric. Learn more at bloomerglive.com slash techlondon. Bloomberg Audio Studios. Podcasts, radio, news. The Stock Movers Report. Your roundup of companies making moves in the stock market, harnessing the power of Bloomberg data. Let's take a look at some stocks on the move today. I'm Nathan Haker, joined by Bloomberg's Dan Curtis before we get to the biggest winners and losers in the pre-market. We've got to talk about the biggest earning story of the day, Dan. That would be broadcom. Kind of a complicated picture here.

1:02Why is the stock lower this morning? Yeah, very complicated. The stock, which trades under ticker, AVGO, is down about 3% in the pre-market. We've seen a lot of fluctuations after the results came out after the bell. Stock went down pretty heavily. Then reversed it was back up. Now we're down to 3%. As you said, very complicated. The fourth quarter outlook coming in below estimate. There's a little bit of a speed bump in the road ahead of this company. It sees $35 billion in sales in the current quarter. That was short of the average estimate. However, after that, the next two years, the company then sees a rapid expansion with results doubling each fiscal year. So quadrupling over two years, which is very robust. The company's also projecting earnings of $30 a share in fiscal 2028. So again, a few years out, stronger than estimates. Short-term bump, but long-term, there looks to be an acceleration. One thing to note though is Broadcom said it sees anthropic and open AI surpassing Google as its biggest customer.

2:03Now both of these companies are in the process of going public, which would provide a capital infusion, and they may need this cash to pay all of their bills. So you also then have the complication of two IPOs potentially necessary for this company to fulfill all of its current estimates for what will happen in the next few years. So when you go out that far, there's a lot of different ways this could go. If it goes smoothly, it looks very strong. However, you could get a few bumps in the road. Okay, so let's put in a little bit of a drag on Nasdaq futures this morning, and even bigger drag from HPE. This earnings story seems a little more straightforward, Dan. Yeah, it is. So HPE shares are down 4% in the pre-market, and the company is failing to live up to the hype that existed into the earnings report yesterday morning. We were talking about Dell. That had HPE investors enthusiastic into their earnings, however, not quite making it. So the company beat top and bottom line estimates for the fiscal third quarter. It raised its revenue projections. Gross margins are expected to moderate towards historical levels.

3:03So we're starting to see signs of margin contraction, and also data center networking revenue fell 6%. And that was driven by supply constraints. Particular area of the overall networking segment led the networking revenue to miss for the period. That is help that is weighing on shares this morning. Okay, so that's one of the biggest losers pre-market, the biggest winner, and then some snowflake. Wow, what a pop. 24% pop ticker S and OW. It's a cloud-based data platform. It's projecting fiscal year revenue will be around $6 billion. That is higher than the average tree estimate. The company's been weaving artificial intelligence into its platform, and that's starting to pay off. It has a coding assistant that they call Coco. It had 2000 new customer accounts that increased total by over 25%. JP Morgan analysts noted that the third consecutive quarter of product revenue acceleration showcases both AI and core upsides. The shares have already more than doubled off the years lows.

4:06It is continuing up significantly higher as both the AI and the non-AI parts of this business show some strong acceleration. We got a pretty positive earning story as well outside the tech space from five below. Right. So ticker is five FIVE. It's a discount retailer. It's lifting its full year outlook, seeing net sales coming in about 4% higher than its previous guidance. Now, this comes in with a little bit of a cautious outlook that the company issued in June. It was concerned about the impact of persistent inflation, but is now raising guidance higher. CEO said that the phrase forecast is a result of the company being able to quickly capitalize on online trends. This stock movers report from Bloomberg Radio. Check back with us throughout the day for the latest roundup of companies making news on Wall Street. And for the latest market moving headlines, listen to Bloomberg Radio Live, catch us on YouTube, Bloomberg.com and on Apple CarPlay and Android Auto with the Bloomberg Business app.

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