Apple, Broadcom, Zoom, Yelp: Stocks to watch

The Yahoo Finance Live show discusses the announcement of Apple's multibillion-dollar deal with Broadcom, as a commitment to reduce its alliance with China and invest in American manufacturing, the decline of Zoom stock despite topping Q1 estimates, and Yelp shares closing higher as activist investor calls for the company's sale.

Video transcript

AKIKO FUJITA: Let's check in on shares of Apple and Broadcom. After the two companies announced a new multibillion-dollar deal, the agreement will see the chipmaker supplying Apple with 5G radio frequency components and wireless connectivity components in the US. Apple CEO Tim Cook saying that he's thrilled to make the commitments that harness in his words, the ingenuity, creativity, and innovative spirit of American manufacturing. All of this to say, Seana, bottom line Apple is looking at more chips here in the US to reduce its reliance on China.

SEANA SMITH: They certainly are. And this is largely expected just given the fact that they are pivoting away from Asia. They hadn't made that announcement of their commitment to the US and investing here.

In terms of what this means for Broadcom, yes, we did see a bit of a move higher when it comes to Broadcom's stock today. Apple did close off just about 1 and 1/2 percent, but Broadcom was in the green. In terms of the degree of this really being a catalyst for the future, a lot of that remains to be questioned.

We heard that from Bob O'Donnell last hour just in terms of exactly what this means. For right now, we know that Apple is Broadcom's largest customer accounting for about 20% of their revenue in the last fiscal year. So certainly that explains the reason why we were looking at shares closing up just over 1% today.

Well, shares of Zoom are closing the day in the red despite reporting fiscal first quarter adjusted earnings and revenue that topped WallStreet's expectations, the online video conference company saying that a plan to grow sales with enterprise customers may not proceed as quickly as expected, which could be playing into the market action this afternoon. We know that data point missed the Street's expectations on the earnings call on the earnings report last night. But again, a dip of 8%, Akiko, just shows that the Street is concerned about the trajectory of this company, what the growth opportunity looks like for Zoom given the fact that many businesses have brought their employees back to the office.

AKIKO FUJITA: Yeah, I mean, that is the constant overhang on this stock, which is that, can they continue to perform at the type of pace that they did over the last few years given the current office environment? Remember, they were a huge beneficiary of work from home. The other concern, though, is this constant we have heard, Seana, which is about competition. Microsoft, a big one here, they recently launched a premium version of their Teams product.

It's not just that. They've also got AI integrated into it. And the concern here increasingly is to what extent Zoom can compete against competitors who are much more well equipped but also in this environment where enterprise just isn't investing as much. And you see the stock today hit down about 8%.

Well, Yelp shares higher today after activist investor TCF Capital Management confirmed reports that it has built a stake of more than 4% in the company. It's asking Yelp to explore strategic alternatives, including a sale. And that led to a big pop on the stock up nearly 6% in the session. Seana, an interesting stat, though, as I was reading into this is when think about activist campaigns, they have dropped this year when you compare it to where things were last year. But certainly, this is one to watch because this isn't the first time that Yelp's been targeted.

SEANA SMITH: It's not the first time. They were targete Just a couple of years ago back in 2019. And that has the street questioning what is different this time around.

KeyBank was out with a note today saying that this newest argument, they're curious in terms of how this differs from what we heard from SQN who did call for that sale not too long ago, just a couple of years ago. When it comes to some of the changes that are needed, Baird is out saying that once again, Yelp is in the crosshairs. But it is better managed this time around and on stronger footing, which you think will give Yelp a little bit of leverage. But obviously, lots of questions about what the future of this company looks like. And you're right, far from the first time that the company has been under pressure from activist investors.