Broadcom stock: risky pattern emerges despite solid tailwinds

The Broadcom stock price has rebounded in the past few days, moving from a low of $295 last week to $345 today as investors cheer the recent plans for AI spending. 

Still, the company remains in a technical bear market after falling by 16% from its highest level in 2025. It has also formed a head-and-shoulders pattern, pointing to a pullback in the near term.

Broadcom stock price technical analysis suggests a potential pullback 

The daily timeframe chart shows that the AVGO stock price has retreated in the past few months, moving from the record high of $412 to the current $343.

A closer look shows that the stock flipped the Supertrend indicator from green to red in December last year. In most cases, this price action normally leads to more downside as it means that bears are in control.

The stock also remains slightly below the 50-day Exponential Moving Average (EMA). Most importantly, the stock has formed the highly bearish head-and-shoulders pattern, which often leads to a deep reversal.

The head is at the all-time high of $412, while the neckline is at $321. Also, the Percentage Price Oscillator (PPO) has remained below the zero line.

Therefore, the most likely scenario is where the AVGO stock price retreats in the coming weeks as AI jitters remain. The bearish outlook will become invalid if the stock moves above the key resistance level at $370.

This outlook is based purely on technicals, as the company has some of the best fundamentals, including its strong revenue and profitability growth. As such, a rebound may form a good entry point for investors with a long-term view.

Broadcom has potential tailwinds 

Broadcom, one of the top technology companies in the United States, is doing well as it continues playing a major role in the booming AI industry. This growth will continue as the biggest companies in the industry continue ramping up their spending, with estimates being over $616 billion.

The most recent results showed that the company’s business continues to grow. Its revenue jumped by 28% in the fourth quarter to over $18 billion. This growth was driven primarily by its AI semiconductor revenue, which has accelerated in the past few years.

One of its most significant deals is its partnership with OpenAI, which will see ChatGPT’s parent company pay it billions of dollars to build its custom chips. As a result, the management predicted that the AI semiconductor segment would double in its first quarter to over $8.2 billion. The final figure will likely be higher than that as Hock Tan, the CEO, tends to be highly conservative.

Broadcom predicted that its business would continue thriving in the coming quarters, helped by its AI business and the diversified nature of its business. The estimate is that its revenue would hit $19.1 billion, representing a 26% YoY. Also, the annual revenue is expected to come in at $97 billion, up by 50% YoY, followed by $134 billion in the next financial year.

This growth momentum explains why Wall Street analysts are highly bullish on the company. For example, Zacke Research upgraded the company from hold to a strong buy.  

Wolfe Research boosted it from peer perform to outperform, while Wells Fargo hiked the rating from equal weight to overweight. The average price target for the AVGO stock price is $437, up by 27% from the current level.

The post Broadcom stock: risky pattern emerges despite solid tailwinds appeared first on Invezz