Broadcom Stock Remains in Bear Territory as Analysts Signal a Floor

Broadcom (NASDAQ:AVGO) stock has fallen about 28% over the past three months, from a record high of $494 to $357 at Friday’s close. Some investors may view the pullback as a potential entry point, as analysts remain largely bullish on the company, pointing to its strong revenue growth. 

Analysts are Bullish on Broadcom Stock

Top Wall Street analysts tracking Broadcom have a strong bullish view of the stock. David O’Connor, a Piper Sandler analyst, initiated his coverage with an overweight rating and a price target of $460. Atif Malik, a Citigroup (NYSE:C) analyst, hiked his target from $500 to $515. 

Other analysts who are bullish on the company are from Evercore ISI ($578), Raymond James ($475), Truist Securities ($520), and Morgan Stanley ($505). In total, Benzinga reports an average target of $478, up 28.2% from the current level. 

Most analysts point to its strong revenue growth, sustained order flows, profitability, and its valuation. The most recent earnings report showed that its revenue growth continued in the second quarter. Its revenue rose by 48% in the second quarter to $22.1 billion, with its AI semiconductor revenue rising by 143% to $10.8 billion.

Analysts expect the revenue and earnings growth have more room to grow. The average estimate is that its annual revenue will jump by 65.86% this year to $105.96 billion, followed by $173 billion next year. This revenue will continue as clients like Google, Anthropic, Meta, and OpenAI continue ramping up their ASIC chips. 

Broadcom’s earnings growth is also expected to keep growing, with EPS rising from $6.82 last year to $11.6 this year. This growth will continue as chip prices continue growing, with Gartner (NYSE:IT) expecting AI spending to hit $2.7 trillion this year and $3.63 trillion next year.

AVGO Stock Technical Analysis

The weekly chart shows that Broadcom’s stock has formed a series of higher highs and higher lows. Along the way, it has formed an ascending channel and is now trading at its lower side. 

The stock has stalled along the 50-week and 100-week Exponential Moving Averages (EMA) and the Supertrend Indicator. These indicators suggest that bulls remain in control.

Therefore, the stock may rebound in the coming weeks as investors buy the dip. If this happens, it may rebound towards the psychological level of $400.

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