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.
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.
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.
This post was last modified on Jan 15, 2025, 11:12 GMT 11:12