Broadcom Inc. (NASDAQ: AVGO) showcased an impressive performance in its latest quarterly earnings report, capturing the market’s attention with a remarkable double beat. The semiconductor industry has been a standout performer this year, and Broadcom underscored its potential by achieving a 4% uptick in revenue, reaching an impressive $9.3 billion and surpassing the anticipated $9.28 billion consensus.
The company’s positive momentum extended to its bottom line, where earnings per share rose to $11.06, compared to the previous figure of $10.45. This exceeded market expectations set at $10.96. Looking ahead to the full year of 2024, Broadcom anticipates a substantial 40% increase in revenue, projecting a robust $50 billion, bolstered by the anticipated benefits from its acquisition of VMware.
However, amidst these optimistic revelations, market reactions were tempered during the Thursday session. The projected revenue fell slightly short of market expectations, hovering at $50 billion, while analysts hoped for $51.07 billion. The company faces challenges in the upcoming year, with factors such as weak enterprise spending and intense competition in the networking chip sector presenting potential headwinds.
Technical
On the 4H chart, a rising wedge has formed, which subsequently suffered a breakdown leading up to the earnings report. Support was found close to the Fibonacci midpoint at $909.76, potentially acting as a pivot point to the retracement of the recent selloff.
The 50-SMA (blue line) could be the first hurdle to the upside at $934.86, while the 25-SMA (green line) is not far above at $944.58. If the price exceeds these levels, it could indicate a shift in the market’s sentiment, potentially opening the door to further expansion toward $983.79, where the breakdown initially occurred.
However, should the price fail to cross the moving averages, the initial downturn from the wedge could be sustained. Support is established at $888.47, the 61.8% Fibonacci golden ratio, which could hold some buyers and potentially ignite a reversal. However, any movement below this level could see the price test support at $868.81, with a demand zone near $844.92 providing neckline support in the longer term.
Summary
Broadcom delivered a double earnings beat on Thursday, triggering a 2% advance in its share price. Going forward, the 50-SMA resistance could be crucial at $934.86 to gauge the sustainability of the current retracement from the rising wedge breakdown.
Sources: Koyfn, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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