Broadcom Beats Revenue Forecast on Surging AI Chip Demand but Warns of Margin Squeeze, Shares Drop 5%

South Africa

South African equities advanced, with the Top 40 up 1.13% to 104,629.66 points and the All Share rising 0.97% to 112,123.60 points, supported by stronger-than-expected October mining and manufacturing data. Formal sector employment rose modestly in Q3, while the SACCI Business Confidence Index jumped to 132.3 on improved tourism flows. Although quarterly GDP growth slowed to 0.5%, sentiment improved after JPMorgan upgraded the domestic banking sector to overweight, lifting bank stocks to record highs. Additional support came from U.S. progress on renewing AGOA, with no current indication that South Africa may be excluded.

Europe

European equities edged higher, with the STOXX 600 up 0.5% at 581.17 points as investors responded positively to the U.S. Federal Reserve’s 25 bps rate cut and assessed the Swiss National Bank’s decision to hold rates at 0%. Gains were broad-based, though sentiment was tempered by renewed concerns over elevated tech valuations following Oracle’s AI spending outlook. The SNB cited improved prospects after a U.S. tariff agreement, while political risks eased as Italy resolved tensions with the ECB over gold-reserve ownership. Meanwhile, EU discussions advanced on potential mechanisms to deploy frozen Russian assets to support Ukraine.

United States

The S&P 500 and Dow closed at record highs as investors welcomed a less-hawkish Federal Reserve, which delivered a 25 bps rate cut while signalling a pause in further easing. The Nasdaq lagged, pressured by a 10.8% drop in Oracle after weak guidance and a sharp increase in planned AI-related capex fuelled concerns around profitability and broader AI valuations. Labour data reinforced mixed macro signals, with jobless claims rising to 236,000. Political pressure for deeper cuts also resurfaced, though markets largely focused on the Fed’s balanced approach amid persistent inflation and softening labour conditions.

Asia

Asia-Pacific equities traded mostly higher, mirroring Wall Street’s strength after the S&P 500 and Dow closed at record levels following the Federal Reserve’s latest 25 bps rate cut. Regional sentiment improved as investors digested the Fed’s balanced policy stance and reaffirmed rate-cut projections. Separately, geopolitical focus centred on India–U.S. trade relations after Prime Minister Narendra Modi spoke with President Donald Trump to seek relief from 50% U.S. tariffs on key Indian exports tied to its Russian oil purchases. Modi noted constructive discussions on bilateral progress and broader regional developments.

Commodities

Oil prices edged higher as the U.S. prepared further interceptions of Venezuelan crude shipments, intensifying concerns over supply risk after a tanker seizure earlier in the week. However, crude remained on track for a weekly decline amid improving sentiment around potential Russia–Ukraine peace negotiations, which could ultimately release additional Russian barrels into the market. Geopolitical uncertainty persisted after Ukrainian drones struck a Lukoil platform in the Caspian Sea, halting production. The IEA upgraded 2026 demand expectations and trimmed supply forecasts, contrasting with OPEC’s view of a more balanced market. Gold gained to a one-month high and silver reached a record as the Fed’s rate cut weakened the dollar.

Currencies

The rand softened slightly against the dollar after a series of South African data releases, including updates on employment, mining, manufacturing and business confidence, provided a mixed macro signal. Sterling held recent gains against a weaker dollar, which continued to face pressure following the Federal Reserve’s dovish tilt, though the pound slipped against a firmer euro as traders positioned ahead of key UK data. The dollar remained on track for a third consecutive weekly decline, with expectations of rate cuts in the year ahead supporting broader G10 currencies and lifting both the euro and sterling to multi-month highs.

Fairvest (FTA) -6.70%

Fairvest has expanded its digital-infrastructure strategy by investing up to R1 billion in Onepath, its fibre-network subsidiary focused on township connectivity across South Africa. The business acquires fibre assets at development cost and leases them to fibertimeTM on long-term, triple-net agreements, supporting stable, accretive rental income. By 30 September 2025, Fairvest had invested R476.9 million for a 79.9% stake, with operational networks established across multiple provinces. The investment enhances Fairvest’s yield profile while strengthening its retail portfolio through improved digital inclusion in underserviced communities.

KAP (KAP) +2.76%

KAP has confirmed the successful implementation of its category 2 disposal of Unitrans Swazi Holdings (Pty) Ltd. The transaction, originally announced on 14 November 2025, involved Unitrans Africa disposing of all issued shares and associated claims in the business. With all conditions precedent now fulfilled, the disposal became effective on 1 December 2025. The move forms part of KAP’s ongoing portfolio streamlining strategy, allowing the Company to sharpen operational focus and redeploy capital in line with its strategic priorities.

Mantengu (MTU) -4.17%

Mantengu announced the successful commissioning of Langpan’s second chrome processing plant on 10 December 2025, marking a significant operational milestone. The 50-tonne-per-hour facility will utilise approximately 300,000 tonnes of on-site tailings, providing around 10 months of cost-free feedstock and supporting the ramp-up required to sustain two chrome plants. Test work was completed by Gravitas Minerals. With chrome operations now scaling, Langpan will begin assessing the potential value of platinum-group metals contained in the tailings, with the Board expected to outline its forward PGM strategy in due course.

Costco Wholesale (COST) +1.15%

Costco delivered a stronger-than-expected first-quarter performance, with revenue rising to $67.31 billion and earnings reaching $4.50 per share, both ahead of consensus. Comparable sales excluding fuel increased 6.4%, supported by resilient demand for essentials and selective discretionary spending. The retailer continued to attract a broad customer base through value-led pricing, strong seasonal promotions and growing penetration of its Kirkland Signature brand. Same-day delivery partnerships with Instacart, UberEats and DoorDash further boosted volumes. Despite a weaker labour market and persistent inflation, Costco’s value proposition continues to resonate, reinforcing its competitive positioning ahead of the key holiday season.

Broadcom (AVGO) -1.60%

Broadcom projected first-quarter revenue of roughly $19.1 billion, ahead of consensus, as accelerating demand for AI semiconductors drives a sharp expansion in its custom ASIC and networking businesses. However, shares fell 5% in extended trading after management warned that gross margins will decline by around 100 basis points sequentially, reflecting a higher mix of lower-margin AI system sales. The company’s $73 billion backlog remains concentrated among five hyperscale customers, increasing investor sensitivity to revenue mix and future profitability. Despite these concerns, AI semiconductor revenue is expected to double to $8.2 billion in the first quarter, reinforcing Broadcom’s growing role as a strategic alternative to Nvidia in large-scale cloud deployments.

Lululemon Athletica (LULU) -0.33%

Lululemon shares rose about 10% after the company announced CEO Calvin McDonald will step down in January and raised its annual profit outlook. Despite strong quarterly revenue of $2.57 billion, the brand continues to struggle in the U.S., losing share to emerging competitors and private-label athleisure, with management acknowledging weak product execution. Finance chief Meghan Frank and chief commercial officer André Maestrini will serve as co-interim CEOs. Lululemon approved a further $1 billion in share buybacks and plans heavier Q4 marketing as it navigates slowing demand, elevated discounting and a planned reduction in inventory units for 2026.

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