What’s Happening With Broadcom Stock?

Broadcom Inc (NASDAQ: AVGO) shares are seeing a decline on Wednesday, retracting from an impressive surge that recently placed the stock in the $1 trillion market cap category. Let’s break down the essentials.

Key Highlights: Over the past week, Broadcom’s stock has skyrocketed by nearly 40% following the release of their earnings report. The surge was fueled by the company surpassing earnings forecasts and offering robust projections for growth in AI-related revenues.

In its fourth-quarter earnings, Broadcom recorded a significant year-over-year revenue increase of 51%, totaling $14.05 billion. However, this was slightly short of the anticipated $14.09 billion, according to Benzinga Pro. Noteworthy is the reported 220% surge in AI revenue, alongside optimistic guidance for growth anticipated in 2025. Affirmative commentary regarding AI during the earnings call also contributed positively to the stock's momentum.

CEO Hock Tan indicated during the analysts' call that the projected total addressable market for the company’s AI chip segment could range from $60 billion to $90 billion in the coming years. He also revealed that Broadcom is collaborating with major cloud providers to develop specialized AI chips, as reported by CNBC.

Additionally, there were recent rumors suggesting that Broadcom is partnering with Apple Inc on the development of AI chips, specifically focusing on networking technology for AI server chips. This news further propelled the company’s stock price.

In the wake of Brightcom's latest fourth-quarter results, numerous analysts have issued positive sentiments. Many have maintained an Overweight rating on the stock, while others continue to endorse a Buy rating. Newly established price targets vary, with estimates ranging from $205 to $255.

Wednesday's drop in Broadcom shares seems largely attributable to profit-taking, following an extraordinary rise that pushed the stock beyond the $1 trillion market capital mark. Having reached all-time highs in the past week, the stock may experience ongoing volatility as investors assess its valuation amid recent developments in AI.

It’s also interesting to note that Broadcom was listed among the top trending stocks on Reddit’s WallStreetBets on Wednesday, indicating growing interest from retail investors.

Current Stock Performance

At the time of writing on Wednesday, Broadcom shares were down approximately 3.33%, trading at $232.18, based on data from Benzinga Pro.

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Broadcom, Stock, AI