Broadcom (NASDAQ: $AVGO) Rally Faces Earnings Test

Broadcom Inc. (NASDAQ: AVGO) enters earnings week after a historic surge, rallying over 180% since April and another 35% following its last earnings beat. Fueled by explosive demand for AI infrastructure, the stock now sits among the top performers in the S&P 500. But with such a steep valuation—42x forward earnings versus its 10-year average of 17x—investors are questioning whether the momentum can continue.

Many analysts remain bullish on Broadcom’s AI exposure. Wall Street expects $1.87 EPS for the fiscal fourth quarter and roughly $17.5 billion in revenue, up sharply from $14.1 billion last year. The AI division remains the crown jewel, projected to generate $6.2 billion this quarter alone, representing a massive 68% YoY increase. Analysts credit Broadcom’s deep involvement in hyperscale computing and its tight integration with Google’s AI ecosystem, especially following the Gemini 3 rollout.

Institutional investors, however, are cautious. Funds like Huntington and Janus Henderson acknowledge Broadcom’s execution but warn that expectations may be excessively high. Last quarter’s rally was driven by Hock Tan’s surprise reveal of a new customer placing $10 billion worth of orders, which pushed the stock to record highs. Without a similar upside catalyst, some analysts fear profit-taking may hit the stock even if earnings meet estimates.

Technical Analysis

On the chart, AVGO recently broke above a major multi-month resistance zone around $385, flipping it into support. The price is trending above the 9-period SMA, showing strong momentum. A sustained hold above $400 opens the path toward the next psychological zone around $450–$500, where the next round of profit-taking may occur.

If sentiment turns risk-off, a retracement back to the $385 demand zone remains likely. For now, structure favors continuation as long as the breakout holds.