In today’s briefing:
- Broadcom’s AI-Driven Growth Signals Upside Amid Stock Split Surges
- Tech Supply Chain Tracker (29-Jun-2024): Notebook shipment update May 2024
- Reiterating Japan Overweight — Add Exposure; Nikkei 225, TOPIX, TOPIX Small All Breaking Out
- EQT/Keywords Studios: Lower Revised Offer
Broadcom’s AI-Driven Growth Signals Upside Amid Stock Split Surges
- Broadcom’s Strong Q2 Performance: Broadcom’s Q2 revenue surged 43% year-over-year to USD 12.5 billion, driven by AI demand and VMware contributions.
- Dominance in AI ASIC Market: Broadcom holds a 60% market share in AI-specific integrated circuits, serving major clients like Alphabet and Meta.
- Lead up to Stock Split Upside Potential: Mega caps have seen an average 17% outperformance relative to S&P 500 from announcement to actual stock split, signaling sharp upside for Broadcom.
Tech Supply Chain Tracker (29-Jun-2024): Notebook shipment update May 2024
- South Korean battery makers stand to benefit from Tesla’s production issues with 46800 cells, boosting profitability in May 2024.
- STMicro and Panasonic Cycle Tech team up to introduce AI technology in e-bikes, making safety enhancements more affordable and accessible.
- Axelera AI secures US$68 million for global expansion in AI, recognizing computing as the new currency and focusing on growth in the tech industry.
Reiterating Japan Overweight — Add Exposure; Nikkei 225, TOPIX, TOPIX Small All Breaking Out
- Our bullish outlook (since early-November 2023) remains intact. We continue to recommend buying dips as long as MSCI $ACWI and $EEM remain above important supports at $110 and $41-$42, respectively.
- We are reiterating Japan as an Overweight — Add Exposure; Nikkei 225, TOPIX, TOPIX Small All Breaking Out. And 2+ year RS uptrends remain intact on TOPIX and Nikkei 225
- We take a break from recommending Technology (though we are still bullish) and highlight buys within global Energy, Health Care, Telecommunications, and Utilities
EQT/Keywords Studios: Lower Revised Offer
- On June 27, Keywords Studios (KWS LN) received an updated cash offer of 2,450p/share from EQT (3.9% lower than initial 2,550p), 66.7% premium, implied EV €2,405 million, 13.2x EV/fwd NTM EBITDA,
- 22.4x Fwd P/E. The likelihood of a strategic buyer making an offer is low, while the offer from EQT is opportunistic, which will seek to merge Keywords with Virtuos.
- The revised lower offer and the small extension to the PUSU deadline do not inspire optimism. Nevertheless, EQT remains a credible bidde. Gross spread stands at 5.9%. Maintain long.
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