Broadcom (AVGO) shares gained 5.17% on Wednesday as JPMorgan analysts reiterated their Overweight rating and $580 price target, signaling approximately 54% upside from the prior close. The move came as investors returned to semiconductor stocks and the bank argued that the market continues to underestimate Broadcom's long-term artificial intelligence opportunity.
The rebound follows a challenging June for Broadcom, which saw its stock decline 14% after the company's latest guidance disappointed investors and triggered a broader selloff in AI-related semiconductor names. Despite the pullback, Broadcom remains up 13% year to date and has gained 58% over the past 12 months. Shares currently trade near $398, roughly 17% below their record closing high of $481.57 reached on June 2.
JPMorgan Sees Buying Opportunity
JPMorgan analysts Harlan Sur and Mayur Ramdhani said they would be aggressive buyers at current levels, citing Broadcom's significant dominance in advanced chip packaging design, cadence of new designs, intellectual property portfolio, and execution track record. The bank pointed to Broadcom's long-standing relationship with Alphabet's Google as evidence of its competitive position, noting that Broadcom has helped Google bring 14 advanced chip designs to market over the past 12 years.
Investor concerns had recently centered on comments from CEO Hock Tan suggesting that Google could diversify parts of its supply chain and that future semiconductor growth may weigh on gross margins. However, JPMorgan dismissed fears that Google's next-generation TPU v9 chip program has been delayed or canceled, stating that contrary to recent sell-side noise, the Broadcom team remains on track to ramp up production.
Google Partnership Provides Long-Term Visibility
According to reports, Google signed a five-year agreement with Broadcom in March covering the next four generations of Tensor Processing Units. JPMorgan believes this agreement provides Broadcom with AI revenue visibility through 2031. The bank also argued that concerns regarding Google's internal chip development efforts are overstated, estimating that Google's in-house chip team remains at least 18 months behind Broadcom, limiting near-term competitive risks.
Broadcom currently designs custom AI chips for six major customers, including Alphabet and OpenAI, while maintaining a leadership position in networking chips used within AI data centers. The company has previously outlined a goal of generating $100 billion in AI chip revenue by 2027. For more on Broadcom's networking ambitions, see Broadcom's Tomahawk 6 Targets Nvidia's Networking Stronghold in AI Data Centers.
Technical Picture Remains Mixed
While long-term momentum remains positive, technical indicators suggest investors are still rebuilding confidence after the recent selloff. Broadcom remains above its long-term trend, trading at $398.36 compared with its 200-day simple moving average of $359.42. The stock has rebounded from recent lows near $375 but remains well below its early June peak near $482.
The longer-term trend remains constructive following the golden cross that formed in April, when shorter-term moving averages moved above the 200-day moving average. However, near-term momentum remains mixed, with resistance emerging in the $420-$430 area. The MACD remains below its signal line, indicating bearish momentum is still present despite the recent rebound. Immediate support is around the recent lows near $375, while the 200-day moving average at $359.42 remains a key longer-term support level. A move above the $420-$430 range could signal a stronger recovery toward prior highs.
Wall Street Consensus Remains Overwhelmingly Positive
According to FactSet, 51 of 55 analysts covering Broadcom rate the stock a Buy, while the average price target stands above $500 per share. For context on the broader AI chip landscape, see Nvidia Rises 2% as Meta's Custom AI Chip Seen as Complement, Not Threat. Additionally, JPMorgan's own record earnings highlight the bank's strong market position; read more in JPMorgan Q2 Net Income Hits Record $21.2B on Trading Surge, Investment Banking Revival.
This article is for informational purposes only and does not constitute financial advice.
