Broadcom Inc. (NASDAQ:AVGO) stock is trading about 0.5% higher in Thursday’s premarket session. The chipmaker is showing relative strength despite weakness in the broader market.
Nasdaq futures are down about 0.5%, while S&P 500 futures have shed 0.41%.
No single company-specific headline appears to be driving Broadcom shares higher. Instead, the early gain comes as traders position around a key technical area following a multiweek pullback from the June swing high.
Technical Analysis
At $364.17, Broadcom is near an important technical zone. The stock is trading 8% below its 20-day simple moving average of $398.16. It is also 5.8% below its 50-day SMA of $389.14.
That weakness shows the near-term trend has cooled. However, Broadcom is only 0.8% below its 200-day SMA of $369.20. Traders often view the 200-day average as a key gauge of the longer-term trend.
Momentum remains weak. The moving average convergence divergence indicator is below its signal line, while the histogram is negative. That suggests buying momentum has faded.
Still, the longer-term setup remains mixed but constructive. The 20-day SMA remains above the 50-day SMA. In addition, the 50-day SMA remains above the 200-day SMA after a golden cross formed in April.
However, bulls still need Broadcom to reclaim its 20-day and 50-day averages to strengthen the technical picture.
- Key resistance: $414.50. This level could limit a rebound and sits above the stock’s shorter-term moving averages.
- Key support: $358. Broadcom is trading close to this level, where buyers previously stepped in. The 200-day SMA is also nearby.
Earnings And Analyst Outlook
Broadcom is scheduled to report earnings Sept. 2.
Wall Street expects earnings of $3.16 per share, up from $1.69 a year earlier. Analysts expect revenue of $29.44 billion, compared with $15.95 billion in the year-ago period.
Broadcom trades at a price-to-earnings ratio of about 60.3, reflecting a premium valuation.
The stock carries a Buy consensus rating with an average price forecast of $513.68.
Erste Group downgraded Broadcom to Hold on July 7. UBS maintained a Buy rating on June 4 but lowered its price forecast to $485. Bank of America Securities maintained a Buy rating the same day and raised its price forecast to $530.
Benzinga Edge Rankings
The Benzinga Edge scorecard highlights Broadcom’s strengths and weaknesses compared with the broader market.
- Momentum: Neutral, with a score of 47.28. The stock remains in a pullback rather than a sustained upswing.
- Quality: Strong, with a score of 95.15. The ranking points to strong underlying business fundamentals.
- Value: Neutral, with a score of 6.47. Broadcom’s premium valuation means investors are paying heavily for future growth and execution.
- Growth: Neutral, with a score of 30.72. Growth remains solid, but the score does not place Broadcom among the market’s highest-growth stocks.
Broadcom’s Benzinga Edge profile is led by quality, while momentum remains mixed and valuation is demanding. Bulls will be watching whether the stock can defend support near $358 and reclaim its 20-day and 50-day moving averages.
Top ETF Exposure
The iShares Semiconductor ETF (NASDAQ:SOXX) has an 8.12% weighting in Broadcom. The iShares Expanded Tech Sector ETF (NYSE:IGM) has a 7.71% weighting, while the First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV) has an 8.05% weighting.
Broadcom’s large weight in these funds means sizable ETF inflows or outflows can contribute to buying or selling pressure in the stock.
Price Action
Broadcom shares were up 0.43% at $364.06 during Thursday’s premarket session, according to Benzinga Pro data.
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