LONG | AVGO (Broadcom) | 1DScenario 1 – Pullback to Structure Zone
Entry: $211.01
Stop Loss: $198.33
Target: $259.05
Risk:Reward: ~1:3
Structure: Pullback to key fib level (~38.2%) and prior breakout base.
Market Logic: Reclaiming structure post pullback; trend resumption with minimal drawdown.
Scenario 2 – Deep Demand Zone
Entry: $187.68
Stop Loss: $162.10
Target: $263.77
Risk:Reward: ~1:3
Structure: 61.8% fib + institutional demand cluster; "if market breaks deep", re-entry possible here.
Market Logic: Value-buy zone; often unfilled unless broad market correction. Ideal for swing/position trader allocations.
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Business Model & Sector Positioning
Core Focus: Broadcom designs and develops semiconductors and infrastructure software solutions. Their chips power AI data centers, 5G infrastructure and cloud networking—key growth pillars.
AI Exposure: AVGO provides custom silicon to hyperscalers like Google and Meta. Its next-gen networking and AI accelerator chips are integral to expanding AI workloads, which fuels earnings upside.
Earnings & Financial Momentum
Recent Results (Q2 FY25):
Revenue up ~43% YoY, beating consensus.
EPS surged ~50% YoY, driven by data center demand.
AI-related revenues now make up nearly 25% of total sales.
Guidance Raised: Management upgraded full-year revenue targets—signaling internal confidence.
Analyst Consensus & Institutional Flow
Buy Ratings: >85% of analysts rate AVGO a Buy.
Price Targets: Median PTs have moved from $260 to $285 post-earnings.
Ownership: High institutional interest—Vanguard, BlackRock and State Street are among top holders.
Dividends: Pays a sustainable dividend (~1.8% yield), increasing yearly—strong signal of financial health.
Macro Environment
Interest Rate Outlook: With the Fed expected to cut by late 2025, tech stocks are well-positioned. Lower yields boost growth stock valuations like AVGO.
Capex Trends: Global cloud providers are increasing AI data center spending—Broadcom is a primary beneficiary.
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Conclusion
Why The Setups Work Fundamentally:
$211.01 Entry: Technical pullback + fundamental tailwind from raised guidance.
$187.68 Entry: Deep value zone backed by secular demand + institutional conviction in AI.
Both zones represent opportunistic entries into one of the most fundamentally sound AI infrastructure plays, with upside tied to macro tech trends, strong earnings, and durable cash flow.
