Broadcom (AVGO) shares are recovering from a recent slide, climbing back to around $340 after touching a low of $328 on Friday. The bounce aligns with a broader uptick in AI-related equities, as investors dip back into the sector following a sharp pullback. However, technical indicators suggest the rebound may be short-lived, with a death cross formation pointing to potential further downside.
Analyst Upgrades Fuel AI Sector Rebound
The immediate catalyst for the bounce was Goldman Sachs upgrading CoreWeave from neutral to buy, raising its price target from $106 to $139. The bank cited CoreWeave's growth potential, while Dan Ives of Yorkville noted the company's $104 billion revenue backlog, which represents committed contracts rather than speculative data center projects. These comments helped stabilize sentiment across the AI space, lifting shares of CoreWeave by 7% and boosting other names like Nebius, IREN, and Nvidia.
Despite the positive news, the risk remains that this rebound is a dead cat bounce—a temporary recovery within a larger downtrend. Broadcom's stock has fallen sharply from its June high of $493, and the recent bounce may simply be a pause before further declines.
Fundamentals Remain Strong
Broadcom's underlying business continues to show robust growth, which explains why many analysts maintain bullish ratings. The average analyst price target stands at $527, representing a 60% upside from current levels. Piper Sandler has an overweight rating with a $460 target, while Citic Securities sees $525, BNP Paribas targets $715, and Evercore sets $578.
The company's revenue and profitability are expanding, driven by multi-year deals with major tech players like OpenAI, Google, and Amazon. Notably, Broadcom is partnering with OpenAI to develop the Jalapeno chip, which OpenAI claims outperforms offerings from AMD and Nvidia. In the most recent quarter, Broadcom's revenue surged 48% year-over-year to $22.1 billion, with AI semiconductor revenue jumping 143% to $10.8 billion.
Looking ahead, analysts expect revenue to grow 93% to $35 billion in the upcoming quarter, followed by a 91.5% increase to $37 billion in the fourth quarter. Given Broadcom's history of beating estimates, actual results could be even higher. Earnings per share are projected to reach $3.83 in Q3, up from $1.90 in the same period last year.
Technical Picture: Death Cross Looms
On the daily chart, Broadcom shares have been in a sustained downtrend, dropping from $493 in June to the current $336. The stock has formed a death cross, where the 50-day moving average crosses below the 200-day moving average—a pattern historically associated with further declines.
If the sell-off resumes, the next key support level is at $300. A break below that could signal more downside. Conversely, a move above the $350 resistance level would invalidate the bearish outlook and suggest the rebound has legs.
Investors are weighing strong fundamentals against a deteriorating technical picture. While the company's AI growth story remains compelling, the death cross suggests caution. The coming weeks will be critical in determining whether the current bounce is a genuine reversal or just a pause before further losses.
This article is for informational purposes only and does not constitute financial advice.
