Wall Street has faced difficult market conditions throughout the year, and the Nasdaq Compound (^IXIC 0.37%) suffered bigger declines in the 2022 bear market than most of its index counterparts. Volatility continued on Friday as what initially looked like another good day for stock investors reversed lower on worries about inflationary pressures.
Even with the volatility, some Nasdaq-listed tech stocks showed signs of life Friday morning. giant flea Broadcom (AVGO 3.94%) reports encouraging financial results, but the gains for the electronic document manager DocuSign (DOCU 12.82%) were even more substantial. Below, you’ll learn more about the trends at the two companies and why shareholders are more excited about their prospects after the latest reports.
Broadcom sees strength in semiconductors
Broadcom shares soared about 3% shortly before the start of regular trading on Friday morning. The semiconductor company posted strong results in its fiscal fourth quarter financial report for the period ending Oct. 30, bucking less encouraging trends elsewhere in the chip industry.
Broadcom’s numbers held up very well. Revenue of $8.93 billion was up 21% year over year, and adjusted net income soared at an even faster rate of 30% to $4.54 billion. That translated to adjusted earnings of $10.45 per share for the quarter, and free cash flow was also impressive at $4.46 billion. Broadcom’s strength stems primarily from its semiconductor solutions business, although its infrastructure software segment also saw a slight increase in sales.
Additionally, Broadcom expects to remain strong. The company cited strong demand for products its customers can use to embrace next-generation technologies, and it continued to spend on research and development to stay at the forefront of technological innovation. Indeed, with so much profit and free cash flow, Broadcom resumed its $13 billion share buyback program and increased its dividend by 12% to $4.60 per share each quarter.
Some investors weren’t thrilled to see Broadcom choose not to offer guidance for fiscal year 2023, but first-quarter projections were better than expected. That was enough to push the stock higher, and unless orders start to slow, Broadcom appears to be managing the macro environment well.
Good signs for DocuSign
DocuSign stock did even better, rising 9% just before the opening bell on Friday morning. The electronic signature and document management software maker saw growth in the fiscal third quarter, which ended Oct. 31, and investors were pleased to see progress in efforts to find a long-term path to lasting success.
Third-quarter revenue rose 18% year-over-year to $645.5 million, with subscription-based revenue accounting for all but about 3% of its total sales. Billings increased to $659 million, up 17% from prior year levels, and margin levels improved from 12 months ago. Ultimately, DocuSign’s adjusted earnings of $0.57 per share were down from the $0.58 it posted a year earlier, but it was better than many investors had expected.
DocuSign’s outlook for the rest of the year also looked encouraging. The software specialist forecast annual revenue of just under $2.5 billion, with fourth-quarter margins at higher levels than they were at the start of 2022.
Shareholders have had to deal with massive volatility in the stock over the past year, with losses of more than 70%. Increasingly, investors are hoping that the downturn will prove overblown and that consistent business performance will bolster confidence in DocuSign in 2023 and beyond.
Dan Caplinger has no position in the stocks mentioned. The Motley Fool fills positions and endorses DocuSign. The Motley Fool recommends Broadcom and recommends the following options: Long January 2024 $60 calls on DocuSign. The Motley Fool has a disclosure policy.
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