What Happened?
Shares of fabless chip and software maker Broadcom (NASDAQ: AVGO) jumped 1.7% in the morning session after the company received positive commentary from Wall Street analysts, who viewed the stock's recent sharp decline as a buying opportunity.
Specifically, Truist Securities raised its price target on the stock to $510 from $500, while keeping a 'Buy' rating. This followed a nearly 20% drop in the share price after the company's recent earnings report, where some investors were reportedly concerned about the lack of a full-year artificial intelligence revenue outlook. Echoing the positive sentiment, a UBS analyst noted the sell-off was likely an overreaction and also increased their price target to $475. The stock also benefited from a broader rally among chipmakers.
After the initial pop the shares cooled down to $332.72, up 0.8% from previous close.
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What Is The Market Telling Us
Broadcom’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 5.4% after it continued a multi-day slide as management warned that its fast-growing artificial intelligence (AI) business would negatively impact gross profit margins. The drop extended a steep decline that began after the company's recent earnings update. During the update, management indicated that increasing sales of custom AI processors, which have lower margins, would reduce the company's overall gross margins in the upcoming quarter. This guidance alarmed investors, who feared that the profitable AI surge might not be as lucrative as Broadcom's traditional software business. The continued selling pressure capped a multi-day slide that was reportedly the stock's worst in several years.
Broadcom is up 43.4% since the beginning of the year, but at $332.72 per share, it is still trading 19.4% below its 52-week high of $412.97 from December 2025. Investors who bought $1,000 worth of Broadcom’s shares 5 years ago would now be looking at an investment worth $7,758.
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