After a volatile summer that followed a consistently upward first half of the year, Broadcom Inc. (AVGO) shares are once again climbing towards record highs. In the past three weeks alone, they’ve surged more than 30%, nearing June’s record high. This impressive rally puts Broadcom in a strong position heading into Q4, especially as some of its semiconductor peers struggle to recover from the summer’s volatility.
Take Micron Inc. (MU) for example. Their stock plummeted 46% between June and the beginning of September, and while it has recovered some ground since then, it still lags far behind its all-time high. If Micron doesn’t regain momentum soon, it could be at risk of entering a downtrend. This is also a concern for Advanced Micro Devices Inc. (AMD), which has been setting lower highs since its peak in March.
Broadcom, however, confidently maintains the upward trend that began almost two years ago. Despite providing lower-than-expected guidance in last month’s earnings report, Wall Street remains optimistic about the company’s long-term prospects.
While the $14.0 billion Q4 revenue forecast fell slightly short of analysts’ expectations ($14.04 billion), Broadcom’s management attributed the shortfall to temporary fluctuations in AI revenue, expecting growth to reaccelerate in Q4. This cautious outlook might have been enough for some investors to pull back, as Broadcom’s shares did experience a dip immediately after the report. However, their subsequent rise speaks volumes about investors’ confidence in the company’s long-term growth potential.
It’s worth noting that Broadcom delivered exceptional Q3 results, exceeding analyst expectations with a year-on-year revenue growth exceeding 47%. This strong fundamental performance makes Broadcom an attractive option for investors seeking to bolster their portfolios in the final months of the year.
Several analysts share this sentiment. Jefferies’ Blayne Curtis, for example, reiterated their Buy rating and $205 price target, noting that “Guidance came in a bit lighter than expected, but management has been messaging lumpiness in AI revenue, and growth is set to reaccelerate in 4Q.” The team at Bank of America went even further, setting a price target of $215. But it was the Rosenblatt Securities team that truly raised eyebrows with their $240 target, implying a potential upside of 40% from Broadcom’s closing price on Monday evening.
This level of bullishness is noteworthy, considering that Broadcom has already gained over 60% since the start of the year. It further suggests that Broadcom might be a prime candidate for investors seeking exposure to the semiconductor space, especially given the recent deflation of the AI-fueled bubble.
Technically speaking, Broadcom’s run of higher lows since last year remains intact, indicating consistent buying pressure at dips. This pattern held true in both August and September. The stock’s MACD remains bullish, while its RSI sits at 58, suggesting positive momentum without being overheated. While Broadcom shares briefly retreated from their recent test of June’s high last week, with the benchmark S&P 500 index reaching a new record high, it’s likely only a matter of time before Broadcom challenges those levels once again.
Broadcom’s strong performance, coupled with the bullish sentiment among Wall Street analysts, suggests the stock has staying power. Its position in the growing AI sector and its consistent track record of exceeding expectations make Broadcom a compelling investment opportunity, especially in the current market landscape.
