Mizuho Bullish on Broadcom Ahead of Earnings, Citing 30-Quarter Performance Streak

Mizuho is taking a bullish, contrarian stance on Broadcom (NASDAQ: AVGO) ahead of its upcoming earnings report, arguing that a recent sell-off has created an attractive entry point. The firm's TMT Sector Specialist, Jordan Klein, highlighted a nearly 30-quarter streak of avoiding consecutive post-earnings stock declines as a key pillar of the thesis.

The Contrarian Call

In a note to clients, Klein identified an opportunity in Broadcom following a mid-teens percentage decline in its stock over the past two weeks. He characterized market sentiment as "deeply negative," a stark reversal from 90 days prior when the stock fell approximately 12% in a single day after a soft financial guide.

This pessimism, according to the note, has created what Mizuho sees as an asymmetric risk/reward setup around the $370 price level. Klein stated that the current investor positioning is the "total opposite" of what it was heading into the previous quarter.

Historical Precedent and Market Sentiment

The core of Mizuho's argument rests on historical precedent and the track record of Broadcom's CEO, Hock Tan. According to Klein, the company has not seen its stock trade down after back-to-back earnings reports in seven full years.

This pattern, which spans nearly 30 quarters, forms the basis for expecting a strong response from management. The note suggests that the severity of the current negative sentiment, combined with this historical performance, makes another disappointing quarter unlikely.

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The Google ASIC Debate

The negative sentiment weighing on Broadcom is primarily driven by the market's "bear narrative" concerning its custom application-specific integrated circuit (ASIC) business. Investors are concerned about potential revenue loss as key hyperscaler client Google (NASDAQ: GOOG) develops more of its own chips in-house.

Klein anticipates that Broadcom's management will directly confront these fears on the September 2 call. He expects the company to "go out of their way to calm investor fears" with bullish growth projections and details on AI revenue opportunities for fiscal 2027 and 2028. The note also cited recent upbeat, long-term forecasts from competitors NVIDIA (NASDAQ: NVDA) and Marvell Technology (NASDAQ: MRVL) as adding pressure on Tan to deliver a confident outlook.

What Investors Are Watching

For the September 2 report, investors will be focused on any specific commentary clarifying the future of the Google business and any new long-term AI revenue projections. While Mizuho is not forecasting a massive rally, Klein's note suggests more "upside vs downside" from current levels.

The stakes are amplified by the stock's typical behavior. Mizuho noted that AVGO historically moves 2-3 times more than NVIDIA following earnings releases, meaning the market's reaction is likely to be significant.