Broadcom at a crossroads below a key resistanceShares in Broadcom Inc (symbol ‘AVGO’) have moved up so far this month with higher momentum to reach an all-time high of $999.50 on 20 November. The focus on AI has been very positive for this share, with the price having gained around 80% since the beginning of the year.
Broadcom’s earnings report for the financial quarter ending in October is expected on Thursday 7 December after hours. The consensus for EPS is $9.71, with the 11 estimates ranging from $9.49 to $9.93. There is currently no indication that the actual dividend of $4.60 will change from last quarter.
‘Broadcom has been one of the relatively less “manic” tech shares during the current AI rush,’ said Michael Stark, an analyst at Exness, ‘That’s partially to do with the price of the share; at nearly $1,000, this looks quite steep for many participants. However, with an estimated PE of about 25 for this year, AVGO is close to fair value by this measure compared to the Nasdaq’s average of about 24.50.’
$1,000 is a critical resistance which might be difficult to break through in the near future unless there’s a significant positive surprise from the upcoming earnings report. Based on TA, it might seem more likely for the price to consolidate or retrace lower and buyers to return when the overbought signal disappears, possibly around $925 or maybe as low as $880. An immediate attempt to push above $1,000 after earnings could be a fakeout: it might be instructive to compare Nvidia’s performance after its latest earnings.
