Broadcom (AVGO) is a Zack Rank #1 (Strong Buy) that is a powerhouse in the semiconductor and infrastructure software industries. As AI adoption accelerates and demand for high-speed connectivity surges, Broadcom stands to benefit from increased enterprise spending and data center expansion.

Despite strong earnings momentum in recent quarters, the stock has been trading sideways. However, rising earnings estimates and solid technical support suggest underlying strength.

With a history of strategic acquisitions and a focus on high-margin businesses, Broadcom remains a compelling opportunity for investors looking for long-term growth.

About the Company
Broadcom has established itself as a leader in high-performance semiconductor solutions while expanding its footprint in infrastructure software, cybersecurity, and networking.

The company employs 37,000 people and has a market cap of $900 billion. It was founded in 1961 and headquartered in Palo Alto, CA.

The stock has a Zacks Style Score of “B” in Growth and Momentum. However, AVGO has an “F” score in Value with a Forward PE at 29.

Q1 Earnings Beat
Broadcom reported earnings in early March, posing a 6% EPS beat. AI-driven growth was the standout, with AI revenue surging 77% YoY to $4.1B, while infrastructure software grew 47% to $6.7B. Gross margins expanded to 68%, and adjusted EBITDA reached $10.1B.

Looking ahead, Broadcom guided Q2 revenue to $14.9B, once again above consensus, with AI revenue projected to climb to $4.4B. The company emphasized its leadership in AI semiconductor solutions, particularly in optimizing large language models and AI data center connectivity. Management also highlighted expanding partnerships in hyperscale AI.

While AI remains the primary growth engine, non-AI semiconductor segments showed mixed results—broadband saw a recovery, but wireless continued to face seasonal declines.

Ongoing investment in next-gen AI accelerators and networking technology is expected to help Broadcom sustain momentum and analysts are lifting their expectations.

Estimates Headed Higher
Since Broadcom reported earnings, analyst estimates have jumped higher across all time frames.

For the current quarter, numbers have been taken from $1.48 to $1.56, a move of 5%

For the current year, estimates have jumped from $6.31 to $6.56 or 4%.

The trend continues next year, with analysts going from $7.45 to $7.74, or 4%.

With those estimates came higher price targets and upgrades. A recent upgrade from Morgan Stanley maintained their Overweight, along with a price target hike to $260, up from $246.

Broadcom Inc. Price and Consensus


The Technical Take
AVGO has been one of the best performers since 2023, but has stalled after hitting fresh highs late last year. The stock is now consolidating after a 23% pullback from those all-time highs.

The 200-day moving average has offered support during the market sell off. Let us take a look at that level along with some other price points to focus on:

21-day: $194

50-day: $213

200-day: $183

Fibonacci resistance: $215

While the stock is finding buyers at that 200-day MA, the goal for the bulls would be to break that $210-215 level. Above that area the resistance is cleared and investors could target the 161.8% Fibonacci extension at $274.

In Summary
Broadcom continues to stand out as a dominant force in AI and semiconductor solutions, backed by strong earnings momentum and rising analyst expectations.

While the stock has been consolidating, solid technical support and improving estimates suggest the potential for a breakout.

With expanding AI partnerships, a focus on high-margin businesses, and ongoing investment in next-gen technology, Broadcom remains a compelling long-term opportunity. If shares can reclaim key resistance levels, AVGO could be poised for another leg higher in the AI-driven market rally.

— Jeremy Mullin

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Source: Zacks