What you need to know
- Broadcom stocks surged during extended trading on Thursday, after the chipmaker announced better-than expected earnings. It also issued a bright outlook amid strong AI-driven growth.
- The stock sits poised to break out from a ascending triangle on Friday, setting the stage for a continuation of the stock's longer-term uptrend.
- This tool predicts a target price of $315. It extracts the trend upwards from December 2023 until June 2018 and then repositions that stock from the top trendline in the ascending triangular pattern.
- Investors should watch key support levels on Broadcom's chart during pullbacks near $185 and $140.
Broadcom’s (AVGO), shares surged during extended trading on Thursday. The chipmaker had reported earnings that were better than anticipated and provided a rosy future outlook amid strong AI-driven growth.
It said that its revenue from AI in fiscal 2024 has more than tripled. This was due to their AI XPUs, and Ethernet networking. The company saw a surge in after-hours profits when CEO Hock Tán told analysts during the earnings call of the company that the AI market is expected to grow significantly over the next 3 years. He also said that the networking and accelerator sales for fiscal 2027 will range between $60 and $90 Billion.
Through Thursday's close, Broadcom shares had gained 64% since the start of the year. Stocks rose to $206 by extended trading.
We break down Broadcom’s technicals and highlight key price levels to watch.
Breakout Triangle Ascending
Since mid-June, Broadcom’s shares have been consolidating within an ascending triangular chart pattern. This indicates a continuation in the longer-term upward trend of the stock.
The price is poised to rise above the top trendline of the formation on Friday. This will lead to further gains.
Moreover the relative strength indicator (RSI) shows a reading that is just over 50. This confirms the bullish trend and suggests the stocks have room to rise as they begin their price discovery.
We can use technical analysis to predict a possible upside price target. Let’s also identify the two main support levels which would attract buyers during retracements.
The Bar Pattern Price Target is Located on the Upside
Investors can forecast the target price of the stock by using the bar pattern, which analyses previous trends and helps predict future direction.
When applying the tool to Broadcom's chart, we extract the stock’s trend higher from December 2023 to June this year and reposition it from the ascending triangle’s top trendline. This suggests a long-term upward target of $315.
This prior move was chosen because it began after a dramatic earnings-driven rise above a pattern of continuation on the chart, in December last. The price movement is similar to that which looks probable following the latest quarterly report.
What to Look for During Pullbacks
Investors should first watch the reaction of the price to $185 during pullbacks. The top trendline of the ascending triangular pattern would attract buyers to this area on the chart. This could turn an area that was previously a resistance level into a future support.
Investors may look for buying opportunities around a horizontal line connecting a series similar trading activities on the chart from February to September.
Investopedia’s comments, opinions and analyses are intended solely as information. Read our warranty and liability disclaimer for more info.
According to the article, as of its date of publication, the author did not possess any of these securities.
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
