Broadcom Inc. (NASDAQ:AVGO) stock edged lower Tuesday in premarket trading after falling 4.77% in the previous session. Risk appetite remained weak, with Nasdaq futures down 0.36% and S&P 500 futures off 0.35%.
Monday’s decline came as leaders at major artificial intelligence companies called for a slower pace of advanced AI development over safety concerns. The debate raised fears that slower AI development could eventually weigh on demand for chips and data center hardware.
Hock Tan Says AI Outlook Has Not Changed
However, Broadcom CEO Hock Tan said the debate has not changed the chipmaker’s long-term AI revenue outlook.
Tan told CNBC Monday that demand for AI compute infrastructure remains “very strong” and durable, particularly for inference.
Broadcom expects AI semiconductor revenue to reach $115 billion in fiscal 2027 and double to $230 billion in fiscal 2028.
His comments followed Anthropic CEO Dario Amodei’s call for a slower pace of frontier AI development. Anthropic is expected to become Broadcom’s largest custom chip customer in 2027.
The debate weighed heavily on AI stocks Monday. Broadcom shares fell about 4.8%, while the iShares Semiconductor ETF (NASDAQ:SOXX) dropped 5.6%.
Tan agreed that AI development needs safeguards. However, he said generative AI could “create huge value.” He compared its potential impact with the Industrial Revolution.
Tan’s comments provided a bullish counterpoint to concerns about slower AI development. Still, Broadcom shares remained under pressure Tuesday as investors weighed the broader risk-off environment.
Against that backdrop, Broadcom’s technical setup remains important. The stock is trading below several key moving averages, which could make it more sensitive to broader market weakness.
See More:
Top Value Stocks
Technical Analysis
At $344.48, Broadcom trades 5.5% below its 20-day simple moving average of $365.08. It is also 9.8% below its 50-day SMA of $382.77 and 6.7% below its 200-day SMA of $370.04.
That setup points to a bearish near-term trend. A sustained recovery above the 20-day and 200-day averages could improve the technical picture.
Momentum also remains weak. The MACD is below its signal line, while the histogram is negative. Both indicators suggest buying momentum has faded.
The 20-day SMA is also below the 50-day SMA. However, the 50-day average remains above the 200-day average following April’s golden cross.
Broadcom faces nearby resistance around $376.50. Support sits near $342.50, just below the current price.
Analyst Outlook
The stock carries a Buy consensus rating and an average price forecast of $518.96.
Piper Sandler initiated coverage with an Overweight rating and a $460 price forecast on Sept. 10. Citigroup maintained a Buy rating and raised its forecast to $515 on Sept. 4. DA Davidson maintained a Neutral rating and lowered its forecast to $350 the same day.
Broadcom trades at about 44 times earnings, reflecting a premium valuation.
Benzinga Edge Rankings
Broadcom’s Benzinga Edge rankings show a mixed setup. Its Quality score stands at a bullish 95.73. However, Momentum is weaker at 26.26, while Growth scores 27.98 and Value stands at 7.48.
Overall, the rankings point to strong business quality but weak momentum and an elevated valuation.
ETF Exposure
Broadcom has significant weightings in major semiconductor and technology ETFs. It represents 8.12% of the iShares Semiconductor ETF (NASDAQ:SOXX), 8.49% of the iShares Expanded Tech Sector ETF (NYSE:IGM) and 9.94% of the Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ).
Its large weighting means substantial ETF inflows or outflows can influence trading in Broadcom shares.
Price Action
AVGO Stock Price Activity: Broadcom shares were down 0.07% at $344.48 during premarket trading on Tuesday, according to Benzinga Pro data.
Image via Shutterstock
Recent Comments