Your Portfolios in Brief
Broadcom is a major player in semiconductors and infrastructure software. The company is well known for its communication chips and, increasingly, for its specialized ASICs designed to accelerate technological applications and reduce computing costs. Since the acquisition of VMware, Broadcom has also positioned itself strongly in enterprise cloud and virtualization, adding a recurring software revenue base to its business model.
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2025 Highlights
• Solid results. In the third quarter of 2025, Broadcom generated US$16B in revenue, up 22% year-over-year. The AI segment contributed US$5.2B, an impressive 63% increase. For the fourth quarter, management is guiding for US$17.4B in revenue, including US$6.2B from AI.
• OpenAI order. Broadcom secured a US$10B deal with OpenAI to design custom AI chips. Production is expected in 2026. Even if this order proves one-time, it confirms Broadcom as a key supplier in the AI ecosystem.
• New products. In August, Broadcom began shipping the Jericho4 Ethernet router, capable of connecting more than one million compute units and supporting massive throughput for AI data centres.
• VMware software. The launch of VMware Cloud Foundation 9.0 enables companies and governments to deploy secure, sovereign private-cloud AI environments.
• Ambitious goals. CEO Hock Tan has even tied his future compensation to achieving elevated AI revenue targets by 2028–2030, underscoring management’s confidence in this trajectory.
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Why It’s a Stock to Watch
1. Unique AI positioning. From custom chips to high-performance networking and VMware software, Broadcom covers multiple critical layers of the AI infrastructure stack.
2. Increased visibility. With an order backlog exceeding US$100B and sequential growth in AI revenues, confidence is high for 2025–2026.
3. Rising capex from cloud giants. Amazon, Microsoft, Meta, and Alphabet are all announcing massive AI investments, directly benefiting Broadcom.
4. Diversification. Unlike players focused solely on hardware, Broadcom also has a recurring software base that stabilizes revenue.
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Conclusion
Broadcom is not just a chip manufacturer: it is a key player across the entire modern technology infrastructure. In 2025, its stock is already up 47% year-to-date and 14% over the past month — a performance that reflects both market confidence and the strength of its business model.
With a diversified product portfolio, a major deal with OpenAI, data centres racing to scale, and a software base generating recurring revenues, Broadcom brings together the key ingredients we look for: sustained growth, visibility, and the ability to deliver quarter after quarter.
At Pratte Portfolio Management, we view Broadcom as a strategic must-own. This is not a company merely riding a trend — it is building the foundations of the next generation of technology.
A stock to watch in the coming months.
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Stocks in Brief
Monday
• Dow Jones: 46,316.07 (+0.15%)
• S&P 500: 6,661.21 (+0.26%)
• Nasdaq: 22,591.15 (+0.48%)
• S&P/TSX (Toronto): 29,971.91 (+0.71%)
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Canadian Dollar
• CAD/USD: 0.7183 US$, slightly higher compared to Friday (0.7173 US$).
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Macroeconomic and Monetary Analysis
North American markets started the week in positive territory despite the threat of a government shutdown in the United States. Investors are focusing on a series of key economic releases expected this week, including the JOLTS report Tuesday, ADP on Wednesday, and the monthly employment report on Friday.
A shutdown, if triggered, would suspend the release of these indicators, but analysts believe that the absence of default risk limits the immediate impact on market confidence.
In the bond market, the 10-year U.S. Treasury yield eased to 4.14% (from 4.18% Friday), providing some relief to growth stocks.
In Canada, the TSX extended its gains, supported by the technology sector and the continued strength of materials.
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Stocks in Brief
• Electronic Arts (EA): +4.50% at $202.05 — surge fuelled by the announcement of its takeover by a consortium including Saudi sovereign fund PIF, valuing the publisher at US$55B.
• Aurora Cannabis (ACB): +28% — rally after Donald Trump posted a video praising the benefits of cannabinoids for seniors.
• Canopy Growth (WEED): +17% — lifted by enthusiasm across the cannabis sector.
• Tilray (TLRY): +60% — explosive session for the producer.
• Cronos (CRON): +12% — also benefiting from the Trump effect.
• AstraZeneca (AZN): announced it will seek a direct listing in New York to attract more U.S. investors.
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Sector Performance
• United States (S&P 500): Technology higher, led by a rebound in Nvidia (+2%), AMD and Micron (+1% to +4%). Consumer discretionary supported by EA’s takeover. Health mixed with weakness in Novo Nordisk (−2.3%) following analyst downgrades.
• Canada (TSX): Technology and Materials led the session. Energy stable despite a slight pullback in oil.
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Tuesday
• Dow Jones: 46,397.89 (+0.18%, new closing record)
• S&P 500: 6,688.46 (+0.41%)
• Nasdaq: 22,660.01 (+0.30%)
• S&P/TSX (Toronto): 30,022.81 (+0.17%)
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Canadian Dollar
• CAD/USD: 0.7182 US$, slightly lower compared to Monday (0.7183 US$).
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Macroeconomic and Monetary Analysis
Wall Street ended higher as investors remained confident despite the imminent threat of a government shutdown in Washington. Without a funding deal, the federal government was set to enter paralysis at midnight, suspending the release of crucial economic statistics such as the monthly jobs report, essential for the Fed in its monetary policy decisions.
The JOLTS index showed in August a higher-than-expected level of job openings (7.227M vs. 7.20M expected), confirming resilience in the labour market, while the Conference Board consumer confidence index fell to its lowest level since April.
These contradictory signals complicate the cyclical outlook for the Fed, whose next October meeting will take place in an environment of heightened uncertainty if the shutdown lasts. In the bond market, the 10-year Treasury yield climbed to 4.16% (vs. 4.14% Monday).
In Canada, the TSX crossed the symbolic 30,000 points, supported by technology strength and a positive quarter end close.
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Stocks in Brief
• Pfizer (PFE): +6.83% at $25.48 — boosted by an agreement with Donald Trump to lower drug prices in the U.S. in exchange for a tariff exemption.
• Wolfspeed (WOLF): +29.41% at $28.60 — continued its spectacular rebound after announcing a successful financial restructuring and exiting Chapter 11 protection.
• Spotify (SPOT): −4.20% at $697.87 — dropped after the announcement that Daniel Ek will step down as CEO in early 2026.
• UiPath (PATH): +8% — surged after announcing strategic partnerships with OpenAI, Nvidia, and Snowflake to integrate its automation solutions into AI.
• Etsy (ETSY): −11% — sharp decline after a strong gain Monday, despite the announcement of a structuring partnership with OpenAI.
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Sector Performance
• United States (S&P 500): Technology strong (rebound in Nvidia, Wolfspeed’s surge, UiPath lifted by AI). Healthcare led by Pfizer. Consumer discretionary mixed (Etsy down, but some names holding up).
• Canada (TSX): Technology and financials supported the index. Materials stable. Energy pulled back as oil came under pressure.
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Wednesday
• S&P 500: 6,711.20 (+0.34%) — historical high
• Nasdaq: 22,755.16 (+0.42%)
• Dow Jones: 46,441.10 (+0.09%) — closing high
• S&P/TSX: 30,107.67 (+0.28%) — new record, helped by base metals and the strength of gold
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Canadian Dollar
• CAD/USD: 0.7174 US$ (down compared to Monday). The loonie remains under pressure with a more accommodative tone from the Bank of Canada and the appeal of gold eating into the greenback.
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Macro and Rate Analysis
• United States — shutdown but markets confident. Even though the U.S. government fell into shutdown, Wall Street kept climbing. Investors are betting on a short closure. The ADP survey showed a loss of 32,000 private jobs in September, mostly in the Midwest. Since the official report scheduled for Friday could be delayed, the Fed risks having to navigate “blind,” but markets are still expecting a rate cut in October and another one in December.
• Canada — BoC and tariffs. The summary of deliberations from the Bank of Canada (after the rate cut to 2.5% on September 17) points to an economic slowdown. The removal of a good part of the retaliatory tariff measures also influenced the decision. No recession in sight according to many, but tariffs will continue to weigh on the economy. The longer the U.S. shutdown lasts, the more it weighs on the U.S. dollar and supports gold.
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Stocks in Brief
• Pfizer (+6%), Merck (+6%), Eli Lilly (+6%) and Amgen (+6%): big rally in the pharmaceutical sector, driven by deals with Washington and tariff exemptions.
• Regeneron (+6.7%): strong gain after encouraging clinical results.
• Lithium Americas (+30%): the announcement of a U.S. government stake continues to propel the stock.
• Fermi America (+40%): spectacular stock market debut for this data centre player boosted by demand linked to AI.
• Conagra (+4%): results above expectations supported by food product demand.
• Corteva (−7%): drop after the announcement of a split into two publicly traded companies planned for 2026.
• Ford (+1%): sales up 8.2% in the third quarter, supported by SUVs and electric vehicles.
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Sector Performance
• United States: the healthcare sector led, helped by lower bond yields; energy was more mixed.
• Canada (TSX): materials and base metals led the way, pushing the index to a new record.
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Commodities
• WTI oil (Nov.): US$61.78 a barrel (−0.59)
• Gold (Dec.): US$3,897.50 an ounce (+24.30)
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Thursday
• Dow Jones: 46,519.72 (+0.17%)
• S&P 500: 6,715.35 (+0.06%)
• Nasdaq: 22,844.05 (+0.39%)
• S&P/TSX (Toronto): 30,160.59 (+0.18%)
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Canadian Dollar
• CAD/USD: 0.7162 US$, slightly down (vs. 0.7174 US$ the day before).
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Macroeconomic and Monetary Analysis
The three major U.S. indexes closed at record highs despite the government shutdown in Washington, now in its second day. Investors are betting on a quick resolution, minimizing short-term economic impacts.
• Treasury Secretary Scott Bessent warned, however, that U.S. GDP could “take a hit” if the shutdown persists.
• The Fed is expected to maintain its plan for monetary easing in October, supported by the blackout of economic data (due to the shutdown) and an already slowing labour market.
• In the bond market, the 10-year Treasury yield eased to 4.08% (vs. 4.10%).
In Canada, the TSX extended its record streak, supported by the strength of materials.
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Stocks in Brief
• Nvidia (NVDA): +1% — new all-time high, fuelled by AI optimism and massive partnership announcements (US$100B with OpenAI, US$5B with Intel).
• Tesla (TSLA): −5.11% at US$436 — despite vehicle deliveries beating estimates (497,099 in Q3, +7% y/y), the stock faced profit taking.
• Occidental Petroleum (OXY): −7.31% — punished after selling its OxyChem chemical division to Berkshire Hathaway (US$9.7B).
• Berkshire Hathaway (BRK.B): −0.46% — cautious reaction from the market to financing the acquisition.
• Starbucks (SBUX): +2.75% — dividend increase (US$0.62/share vs. US$0.61).
• Fair Isaac (FICO): +20% — announced a new direct distribution model for FICO scores, seen as disruptive to credit bureaus (Equifax, TransUnion down 9–12%).
• Disney (DIS): brand sentiment weakened for Disney+ according to Jefferies, following the Jimmy Kimmel controversy and a price hike.
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Sector Performance
• United States: Technology led (Nvidia, FICO); Consumer discretionary mixed (Starbucks higher, Target downgraded by Truist); Energy under pressure (Occidental sharply lower).
• Canada (TSX): Materials and precious metals supportive, energy weaker despite lower oil.
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Commodities
• Crude Oil (WTI Nov.): US$60.48 (−1.30)
• Gold (Dec.): US$3,868.10 (−29.40)
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Friday
• Dow Jones: +0.2% (+88 pts)
• S&P 500: +0.2%
• Nasdaq: +0.3%
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Canadian Dollar
• CAD/USD: 0.716 US$, stable.
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Macroeconomic and Monetary Analysis
Wall Street is moving little this morning, after new records yesterday, supported by enthusiasm around artificial intelligence.
• The U.S. government shutdown enters its third day, fuelling concerns of economic slowdown.
• The absence of the September jobs report increases uncertainty: the Fed will have to adjust its October decision without complete data.
• Despite these headwinds, U.S. indexes are heading for a positive week: +1.1% for the S&P 500, +0.6% for the Dow, +1.6% for the Nasdaq.
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Stocks in Brief
• Apple (AAPL): −0.7% — downgraded to underperform by Jefferies, citing excessive expectations for a future foldable iPhone.
• USA Rare Earth: +8.8% — CEO announced close discussions with the White House.
• GameStop (GME): −2.7% — announced asset and debt sales.
• Applied Materials (AMAT): −2.2% — warned that new U.S. export restrictions will weigh on revenue.
• Johnson & Johnson (JNJ): +1% — upgraded by Wells Fargo to overweight (target: $212).
• Ferrari (RACE): initiated at buy by Berenberg, despite a 0.9% decline.
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Sector Performance (morning trend)
• Technology: mixed (Apple under pressure, Nvidia still solid).
• Energy: weak, oil heading for its worst week since June.
• Healthcare: supported by Johnson & Johnson.
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Commodities
• Crude Oil (WTI Nov.): US$60.80 (+0.53%) but down 7.5% on the week.
• Brent: down 8.5% this week, worst performance since June.
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Conclusion
The week ended with record highs on Wall Street, fuelled by optimism around artificial intelligence and expectations of monetary easing from the Fed, despite the tense political climate in Washington. The government shutdown, now in its third day, heightened uncertainty by depriving markets of key indicators such as the September jobs report, but was not enough to halt the advance of the indexes.
In the United States, technology and healthcare were the main drivers of gains, supported by Nvidia, Fair Isaac, and the broader pharmaceutical sector. By contrast, energy lagged, with oil posting its worst week since June.
In Canada, the TSX crossed and consolidated the 30,000-point threshold, supported by materials and precious metals. The Canadian dollar moved little, reflecting a balance between firm commodity prices and a more accommodative monetary backdrop.
In summary, the week showcased the resilience of markets in the face of political and economic headwinds. Investors continue to bet on a favourable interest rate path and the strength of the AI cycle, while keeping a close watch on the duration of the shutdown and its longer-term repercussions.
