CNBC’s Jim Cramer told investors on Friday to buy the sharp, post-earnings sell-off in Broadcom shares. “This company is on fire,” Cramer said on ” Squawk on the Street ,” pointing to the custom chipmaker’s long list of notable clients, including Alphabet , Meta Platforms , ByteDance-owned TikTok, and Anthropic. The stock sank nearly 11% following a strong Thursday evening quarterly beat and guidance raise that got overshadowed by some misinterpreted remarks by management on the earnings call. It didn’t help that Broadcom shares ran up this week ahead of the print, which heightened already high expectations. Some profit-taking may be at play here as well. So, what happened on the call? The Street, which was already concerned about AI froth, became worried about Broadcom’s partnership with Google-parent Alphabet. Broadcom co-designed the Google custom chips that trained and run the Gemini 3 AI model. Investors were not fans of how Broadcom CEO Hock Tan responded to a question about Broadcom’s customers potentially developing custom chips in-house. Tan did not dismiss the notion outright. On top of this, Broadcom CFO Kirsten Spears sparked margin worries. “[In] the second half of the year, when we do start shipping more systems, the situation is straightforward. We’ll be passing through more components that are not ours. … Those costs will be passing through more costs within the rack. And so those gross margins will be lower,” she said. Cramer said that neither is a reason to be concerned, directly shooting down the margins narrative. “If the margin commentary was why the stock was down, basically it’s an opportunity,” he said. “At the end of the day, there’s more business, even a lower gross margin, maybe a new customer.” Following Thursday evening’s earnings call, the Club reiterated its hold-equivalent 2 rating on the stock, but raised our price target by $10 per share to $425. Broadcom hit a record high close of $413 on Wednesday, which was close to our previous PT. Broadcom and Meta are holdings in the 35-stock CNBC Investing Club portfolio. (Jim Cramer’s Charitable Trust is long AVGO, META. See here for a full list of the stocks.)
