Weekly Equities Forecast: Broadcom, Target & JD.com

Broadcom Q1 earnings preview

US chip stock Broadcom, which has been riding the AI boom over the past two years, will report earnings on Thursday. The results come as the share price rose sharply across 2023 and 2024, more than tripling from $60 to $200. However, the price tumbled 7% following Nvidia’s results, which failed to impress a tough audience.

Broadcom’s fiscal Q4 numbers were encouraging, with EPS of $1.42 on revenue of $14 billion. The company also forecast Q1 revenue of $14.6 billion, driven by AI chip demand. This would represent a 22% increase compared to the same period last year and up on Q4. Broadcom's AI growth momentum is being driven by its AI and networking businesses, which account for around 25% of revenue. Broadcom could be considered the number 2 AI semiconductor franchise after Nvidia.  Profits are expected to be $1.50 a share; gross margins are forecast to rise 100 basis points sequentially to 77.9%, with the focus once again on how management frames Q2 guidance.

How to trade AVGO earnings?

AVGO jumped after Q4 earnings, rising to a record high of 250. Since then, the price has trended lower in choppy trade. The bearish engulfing candle is an ominous sign. Sellers will need to take out the 185 – 195 support zone to extend losses toward the 50 SMA at 170. Below here, 155 support comes into play.

Should the 185-195 support zone hold, buyers will look towards resistance at 220 ahead of the 50 SMA at 227.

Target Q4 earnings preview

Target, the budget US retailer, saw shares drop sharply in November to a year low after missing both revenue and earnings forecasts only months after lifting the same estimates. They also cut forecasts for Q4, and consequently, the annual profit (EPS) forecast was slashed to between $8.30 and $8.90. In an attempt to improve the footfall target, they have been slashing prices across a range of goods. Comparable store sales were down 1.9% in Q3, although digital sales were a particularly strong point with a growth of 10.8%. Rival Walmart reported in February and warned about upcoming weakness in the US consumer, sending Walmart shares and shares across the sector lower.

Expectations are for earnings per share of $2.25 on revenue of $3.85 billion. Guidance will be watched closely after store traffic has dropped sharply following the company's move to end its diversity-related goals and initiatives, as customers vote with their feet.

How to trade TGT earnings?

Target trades below its falling trendline and is testing support between the 118-126 zone. Sellers supported by the RSI below 50 will look to take out support and drive the price lower to 100, the October 2023 low. Should the support hold, any recovery would need to rise above the 100 SMA at 137 and the falling trendline at 150.

JD.com earnings preview

JD will release earnings on Thursday, the 6th of March, to a backdrop of share price weakness and weakness in the Hang Seng. The Hang Sang Index fell 3.3% on Thursday after the US president said he would impose an additional 10% tariff on China on top of the 10% duties imposed on its exports to the US earlier in the month. Chinese e-commerce firm gdjd.com dropped 4% on Friday. However, it is still up 18% year to date. That said, it still lags behind rivals Alibaba and Temu, owner PDD, whose shares are up 54% and 26%, respectively, amid fierce industry competition.

As a result, jd.com is also looking to compete in other areas as it launches the JD takeaway food delivery platform. Investors will watch for further insight into this new part of the business. However, given the tough food delivery business, some concerns over its impact on its profitability exist.

JD.com posted a net revenue of CNY 260.4 billion, a 5% year-on-year increase. This rise has been mainly attributed to an increase in electronics and home clients and ongoing momentum in general merchandise. Investors will be keen to see if this trend continues.

How to trade JD.com earnings?

JD.com trended lower from February 2021, falling to a low of 20.5 before rebounding higher. The price has broken out from its falling channel, rising above the 50 SMA. The gains are still being capped by the 200 SMA at 47. Buyers would need to rise above here to extend gains towards 63, the 2023 high. Failure to retake the 200 SMA could see sellers retest the 50 SMA at 33, also the 2025 low. A break below here creates a lower low.