Can Broadcom (AVGO) Earnings Save The Struggling Tech Sector?
Broadcom (AVGO) will report earnings after today’s closing bell, with the shares of this quiet powerhouse of the market reaching new all-time highs yesterday of 414.61. The semiconductor company’s shares have tripled from their 52-week lows during the April tariff news price shock, and Broadcom boasts a $1.95 trillion market cap as of yesterday’s close. This puts it at the #7 ranking in the S&P 500, eclipsing the likes of Meta Platforms (META), Tesla (TSLA), Berkshire Hathaway (BRK/B), and Walmart (WMT).
Expectations for today’s earnings are for $1.87 EPS vs. $1.42 year-over-year (+31.6%), and for revenue of $17.5B against $14.05 last year (+24.5%). The options market for the Dec. 12 expiration that will capture today’s earnings shows high implied volatility, with traders looking for a +/- $26 (6.4%) potential range. However, this morning’s stage is not exactly set nicely for the sector: a mixed earnings report yesterday from Oracle (ORCL) is sending tech stocks lower in early trading, with Oracle plunging -12% and Broadcom down about -1.5%.
Geopolitical and legislative risks continue to be major factors in the vital semiconductor sector, with headlines seemingly every day about new developments in the artificial intelligence race and trade war wrangling between the United States and China. Unlike companies such as Nvidia (NVDA) that focus on high-end graphics computer chips and A.I., Broadcom focuses more on the foundations of the digital world. It designs and supplies critical products like chips for wireless and Bluetooth products, networking devices such as ethernet switches and routers, infrastructure software, and more.
Recent activity from analysts seems to have a more bullish lean on Broadcom heading into earnings. Rosenblatt this week boosted its price target to $440 from $400 and kept its buy rating, while Cantor Fitzgerald raised its target to $525 from $450 and maintained its own buy rating as well. Oppenheimer and Susquehanna also increased their price targets earlier this month.
As previously mentioned, Broadcom shares closed near their all-time highs yesterday, which can make projecting potential resistance more challenging. One thing traders may note is a confluence of the Dec. 12 expected move range, which gives an upper boundary of around 435, and the yearly +1 Standard Deviation Channel, which was near 432 as of yesterday’s close. Meanwhile, downside points of interest include old highwater marks near 403, 386, and 370. To consider the Dec. 12 expected move once again, the lower boundary of about 383 sits between the old 386 highs from late October as well as the 21-day Exponential Moving Average near 380, so this is another standout area of potential support.
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