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If NVIDIA Corp prepares to release its highly anticipated earnings report on Wednesday evening, investors are closely watching the potential ripple effects on the broader market – and especially on similar stocks like Broadcom Inc (NASDAQ:AVGO).
What you need to know: Nvidia’s dominance in AI-driven technology and its central role in the S&P500s performance makes its results a market-moving event, impacting key players in the semiconductor industry.
Broadcom, like Nvidia, has capitalized on the rising demand for AI infrastructure. It supplies high-performance networking chips and custom silicon that powers data centers: critical components for Nvidia’s AI-focused business.
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A strong profit margin from Nvidia could boost investor confidence in AI’s growth prospects, increasing sentiment around Broadcom as a beneficiary of the same demand factors. Conversely, a disappointing Nvidia report could signal a slowdown in AI investments, which could dampen Broadcom’s prospects.
Historically, Broadcom’s shares have kept pace with Nvidia’s during major market reactions. Nvidia’s implied one-day move of 12.5% adds volatility to the semiconductor sector, underscoring the high stakes.
By now you’re probably curious about how you can participate in the market for Broadcom – whether that means buying shares or even trying to bet against the company.
Buying shares is usually done through a securities account. A list of possible trading platforms can be found here. Many of these allow you to purchase “fractional shares,” which allow you to own portions of the stock without purchasing an entire share. For example, some stocks, like Berkshire Hathaway, can cost thousands of dollars to own just one share. However, if you only want to invest a fraction of that, you can do so through brokers.
If you want to bet against a company, the process is more complex. You’ll need access to an options trading platform, or a broker that allows you to short a share of stock by lending you the shares to sell. The process of shorting a stock can be found on this resource. Otherwise, if your broker allows you to trade options, you can buy a put option, or sell a call option at a strike price higher than where the stock is currently trading. Either way, you can benefit from the stock price drop.
