- Summary:
- Broadcom stock price has recently formed a bearish double-top pattern, but is on a rebound that could see it repeat 2024 exploits.
Broadcom stock price was up in the pre-market session on Wednesday, extending its reversal from the $220 support. The stock has lost 6.1% of its value in the last five sessions, and had formed a bearish double-top pattern. Therefore, a second successive session above that level builds a case for a potential reversal.
A Risk/Reward Assessment of Broadcom Stock Price
Speculation has been rife in recent days that US President Joe Biden could announce a new series of bans against AI chip exports to China. That has raised concerns that Broadcom could suffer a revenue slump.
The company’s third-largest customer, Bytedance, faces a struggle to protect its app, TikTok from a ban by the United States government. According to Citi analysts, Broadcom could generate $2-$3 billion from sale of its ASICS to Bytedance.
Broadcom stock price was the seventh-best performing stock in the S&P 500 in 2024 after gaining 110.4%. However, a ban by the US government against the export of high-grade AI chips to China could subdue its growth. Nonetheless, anslysts are optimistic of a strong performance by Broadcom.
For instance, Mizuho raised its price target from $245 to $260 on January 10, while Truist raised it from $205 to $245. These imply an upside of 11%-15% from the current price. On the other hand, Citi analysts have a more conservative price target of $220 but have maintained a buy rating.
Meanwhile, there has been talk of another stock split by Broadcom (NASDAQ: AVGO) in 2025, and that too, could help boost the stock’s performance. The company conducted a 10-for-1 stock split in July 2024, and has risen by about 28% since that time.
Stock splits enable more people to buy stocks and Broadcom’s strong growth means that many investors could be jostling to own a piece of it. Also, Broadcom stock price could be boosted once the company reveals more details of its Extreme Processing Units (XPUs), a high-grade class of equipment that could raise its profile in the AI race.
Broadcom Stock Price Prediction
The momentum on Broadcom stock price calls for further upside if action stays above $222.90. With the buyers in control, AVGO price will head higher and likely encounter the first resistance at $226.70. However, the stock could break that barrier if the upward momentum strengthens, potentially extending gains to test $230.00.
Conversely, the sellers will take control if Broadcom breaks below $222.90. If that happens, immediate support is likely to be at $220.00. The upside narrative will be invalid if it breaks below that level. Also, an extended control by the sellers could send it lower to test $216.95.
