Broadcom CEO likens AI investors to casino gamblers after co-founder sells $750M
Broadcom CEO Hock Tan likened AI investors to casino gamblers, even as co-founder Henry Samueli sold roughly $750 million of the company’s stock this year.
Cramer attributes Marvell's 8% post-earnings drop to valuation, not results, as data center stocks face high expectations.
Jim Cramer described Marvell's most recent quarter as solid but cautioned that the stock might give back some of its 2026 advance. He said the same danger applies to other data center stocks.
On Thursday, the chipmaker surpassed Wall Street projections. Nonetheless, the stock declined more than 8% ahead of Friday's opening.
For its fiscal second quarter, Marvell posted revenue of $2.74 billion. That amount rose 37% compared with the prior year and exceeded the $2.72 billion estimate.
Data center revenue drove the quarter. The unit brought in $2.17 billion, up 46% year over year, and accounted for 79% of total sales.
Profit growth was equally robust. Net income came in at $308 million, compared with $194.8 million in the year-ago period. Adjusted earnings were 94 cents per share.
The company also provided upbeat guidance. Marvell forecast roughly $3.15 billion for the current quarter, higher than the $3.04 billion consensus. It also increased its fiscal 2028 revenue goal from $16.5 billion to $18 billion.
However, selling pressure dominated. The stock ended Thursday at $241.45 and was trading around $222 in Friday's pre-market, reflecting an 8.05% decline.
Investors had already realized a 178% gain for the year. Hence, the threshold for further upside was significantly higher than a modest earnings beat.
This response mirrors Broadcom's selloff after a record quarter in June, where robust AI figures still led to a double-digit decline.
Cramer characterized the decline as a problem of valuation, not execution. In his view, CEO Matt Murphy performed well, but expectations were too elevated.
He expressed this opinion on X shortly after the earnings release.
Matt Murphy with a solid Marvell Q. The issue is, as is the case with so many of these, the monster run. We see this with so many data center stocks…
— Jim Cramer (@jimcramer) August 28, 2026
Cramer has tracked this sector throughout the year and in July identified his AI spending cycle winners. Chip suppliers were prominent on that list.
Cramer believes the same pattern is now recurring across the industry. Investors are rewarding earnings beats less and penalizing any shortfalls severely.
A day earlier, Nvidia experienced a comparable reaction. Its second-quarter results surpassed estimates and its guidance exceeded projections, but the stock fluctuated wildly before stabilizing.
Marvell's investor day on October 6 will be the next milestone. Murphy indicated that custom silicon revenue is expected to more than double in the coming year. He also pointed to potential upside to a $10 billion goal for fiscal 2029.
The stock's rally had left minimal margin for mistakes. Marvell has still advanced more than 225% in the last twelve months.
Risk also exists beyond the financial results. A political pushback against data centers has become part of the 2026 midterm election discussion. Meanwhile, traders are monitoring semiconductor chart patterns for the next move.
Marvell's growth momentum remains strong. The next few weeks will reveal if buyers come back at these prices. If not, the data center sector might require a more significant pullback.
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Broadcom CEO Hock Tan likened AI investors to casino gamblers, even as co-founder Henry Samueli sold roughly $750 million of the company’s stock this year.
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