Shares of tech giant Broadcom Inc. (NASDAQ: AVGO) have been a joy for investors to hold, delivering a massive 130% gain in 2024 that included an all-time high in December. It would have been a shock for them when the rally came to an abrupt halt last month after a DeepSeek-driven selloff saw the stock shed 20% in just a matter of sessions. But instead of rolling over, Broadcom has come roaring back, gaining 20% in the past two weeks alone and looking poised to keep climbing.
Momentum is clearly on its side. The semiconductor sector remains one of the most sought-after areas of the market, and Broadcom continues to position itself as a leader in AI, cloud computing, and networking technology. Add in a strong earnings report, rising dividends, and fresh bullish calls from analysts, and it’s hard to ignore the potential upside oozing from this stock. Let’s take a closer look.
Broadcom's Earnings Strength and Market Confidence
For starters, Broadcom’s December earnings report reinforced just how strong the company’s growth trajectory remains. EPS topped expectations, revenue climbed more than 50% year over year, and management raised forward guidance - all bullish signals that Wall Street loves to see.
Broadcom’s decision to increase its dividend was even more telling, which signals confidence in long-term cash flow and earnings stability. Investors tend to take these actions as clear signs of strong financial health, and they help explain why last month’s dip has been so quickly bought up.
Analyst Endorsements Signal More Upside for Broadcom
In addition to this, the Wall Street analysts remain firmly in Broadcom’s corner. In the aftermath of last month’s sell-off, the team at Morgan Stanley reiterated its Overweight rating. This was followed up by the Jefferies team, which reiterated their Buy rating on the stock last week.
Both of these echoed the updates from Barclays and Mizuho earlier in the year. The respective teams of analysts there reaffirmed their Overweight and Outperform ratings, each setting a $260 price target. The common themes across these bullish stances reflect expectations that Broadcom’s growth trajectory remains intact, with its AI and cloud computing businesses set to fuel further gains in 2025.
And the best news for those of us on the sidelines? Even with 20% worth of gains logged in the past two weeks, those price targets point to further upside in the region of 10% and would have the stock back trading at all-time highs.
Risks to Watch
Despite maintaining its bullish rating, Morgan Stanley’s recent note did include a slight downward revision to its price target. While this doesn’t signal a lack of confidence, it does suggest that Broadcom’s valuation could be a concern for some investors, especially with some new competition to contend with. With the stock already up 130% in the past year, strong earnings through the coming year will be needed to continue to justify its share price and the price-to-earnings ratio of 180.
Another key risk comes from DeepSeek and the broader AI competition. As China’s AI capabilities continue to expand, there is growing concern that US-based AI firms, including Broadcom, could face increased pressure in the coming years.
Why This Might Be the Perfect Entry Point
However, not only can the company point to strong analyst support and impressive fundamentals, but Broadcom’s technical setup also remains highly favorable despite these concerns. After its sharp pullback last month, the stock has quickly regained momentum, but its relative strength index (RSI) is still only at 56, indicating that there is still plenty of room for further upside before the stock enters overbought territory.
With shares rebounding sharply and major institutions remaining bullish, the current price range could be an attractive entry point for investors looking to capitalize on Broadcom’s long-term growth. If the semiconductor sector continues its strong performance and earnings growth remains robust, it wouldn’t be surprising to see Broadcom challenge its December highs again soon.