Broadcom Inc. (NASDAQ: AVGO) is scheduled to report its first-quarter earnings after the market closes today, March 7, 2024. The company has enjoyed a remarkable run over the past year, appreciating over 112%, and is currently up over 23% year-to-date. This strong performance reflects the company’s solid financial position, driven by its diverse product portfolio and exposure to high-growth markets like AI.
Analysts expect Broadcom to report earnings of $10.37 per share on revenue of $11.795 billion for the first quarter of 2024. Positive earnings that meet or exceed expectations, particularly with solid guidance and commentary on AI, could further fuel the share price rally. Beyond the immediate results, investors are particularly interested in Broadcom’s outlook, especially regarding its Artificial Intelligence (AI) segment. The company is considered a leader in the “AI5” group of stocks, which are expected to benefit from the growing adoption of AI technologies.
The anticipation is not without merit. Broadcom’s recent announcement of the world’s first 5nm PCIe Gen 5.0/CXL2.0 and PCIe Gen 6.0/CXL3.1 retimers marks a significant milestone, showcasing its leadership in connectivity technology and commitment to advancing AI data center solutions. This innovation is expected to enhance server performance, a critical factor as AI applications demand increasingly high bandwidth and low latency.
Technical Analysis
Broadcom’s share price is currently trading slightly lower within an ascending channel pattern, exhibiting short-term consolidation ahead of the earnings release. The share price sits comfortably above all three key moving averages [50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line)], indicating a long-term bullish trend. Additionally, the RSI (62.31) sits above 50, signifying positive momentum.
With the company releasing their earnings results after the bell today, positive results could push the price higher, with the all-time high of $1438.17 acting as the initial level of resistance higher. Excellent earnings coupled with a positive outlook, especially on AI, could propel the share even higher, with the 23.60% Fibonacci extension level ($1,494.29) and 38.20% % Fibonacci extension level ($1,529.00) acting as the next levels of significance.
Conversely, disappointing results could see a swift decline towards the 23.60% Fibonacci retracement level ($1,286.40). A significant break below this level, accompanied by high volume, could trigger further selling pressure towards the 38.20% ($1,192.51) and 50.00% ($1,116.63) Fibonacci retracement levels.
Summary
Broadcom’s solid fundamentals and positive technical setup suggest a potentially bullish outlook post-earnings. A positive earnings report, coupled with optimistic guidance on the AI segment, could propel the share price towards resistance levels at $1,438.17 and beyond. However, a disappointing report could trigger a pullback, with initial support at $1,286.40.
Sources: TradingView, Benzinga, Dow Jones Newswires, Reuters, Investor’s Business Daily.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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