Jim Cramer Says Market Isn't 'Oversold Enough' For A Powerful Bounce Back Led By Broadcom's Strong Earnings

As the Nasdaq 100 index entered the correction zone on Thursday, Broadcom Inc. (NASDAQ:AVGO) surged 12.82% in after-hours, however, CNBC’s Jim Cramer believes that Broadcom’s strong earnings won’t be able to help the index out of the slump.

What Happened: Broadcom slipped 6.33% on Thursday when Nasdaq 100 plunged nearly 10% from its previous high, entering a correction phase. However, AVGO recovered during after-hours as it reported better-than-expected earnings and guidance.

While Gary Black, the managing partner at Future Fund LLC, believed that Broadcom’s first quarter artificial intelligence spending of $14.9 billion, above the estimated amount of $14.6 billion, could help the AI stocks on Friday, Cramer changed his stance on Friday morning.

Cramer took to X and said that the Nasdaq correction wasn’t “oversold” enough to expect a “powerful” bounce back led by Broadcom’s strong earnings.

See Also: Nasdaq 100 To Enter Bear Market Territory? Next Two Weeks Crucial As 3.5% Fall Following Correction Can Make It A Reality, Warns Analyst

Why It Matters: The Nasdaq 100 entered correction territory on Thursday, falling 9.76% from its record high to 20,052.64, and breaking below its 200-day moving average for the first time in nearly two years. The 497 trading sessions for which the Nasdaq 100 index was above its 200-day moving average, was the second longest streak in its history, returning 73% to investors.

The semiconductor giant beat the first quarter revenue and earnings estimates, reporting $14.92 billion and $1.60 per share, respectively. It projects second quarter AI semiconductor revenue of $4.4 billion, driven by hyperscale partner investments, and overall revenue of approximately $14.9 billion, exceeding analyst expectations.

"We expect continued strength in AI semiconductor revenue of $4.4 billion in Q2, as hyperscale partners continue to invest in AI XPUs and connectivity solutions for AI data centers,” said Hock Tan, president and CEO of Broadcom.

Price Action: Most AI-linked stocks were up in pre-market on Friday and Broadcom surged 10.89%. Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) was up 0.50% to $490.65.

Broadcom has a consensus price target of $537.08 based on 26 analyst ratings, with recent targets from Morgan Stanley, Barclays, and Mizuho averaging $255.33.

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