Broadcom (AVGO) stock forecast: June 12th will be crucial

Broadcom (NASDAQ: AVGO) stock price is hovering near its all-time high as investors wait for its upcoming earnings. It was trading at $1,400 on Friday, a few points below the record high of $1,445. It has jumped by over 26% this year and by more than 410% in the past five years, giving it a market cap of over $650 billion.

Broadcom earnings ahead

Broadcom has grown to become the 11th biggest company in the world. It achieved that by both organic growth and through acquisitions. It acquired Brocade in 2017, CA Technologies in 2018, Symantec in 2019, and VMWare in 2023.

These acquisitions have helped its business grow its revenue from over $22.59 billion in 2019 to over $35.8 billion in 2023. However, the company’s debt has jumped from over $30 billion in 2019 to over $73.42 billion in the last quarter. 

The buyouts have also helped the company expand its infrastructure software business, which is made up of businesses like cybersecurity, cloud infrastructure, and storage area networking. Its free cash flow has also risen from over $9.2 billion in 2019 to over $17.6 billion in 2023.

Broadcom growth

Looking ahead, the next catalyst for the AVGO stock price will be its earnings, which are scheduled for June 12th. Analysts expect the company’s revenue will come in at $12 billion from $11.96 billion in the fourth quarter. It had made $8.7 billion in the same quarter in 2023.

For the year, analysts expect that its revenue will be $50.41 billion, a 40% increase from what it made in 2023. This surge will be because it acquired VMWare and the ongoing trend in artificial intelligence (AI).

A key concern about Broadcom is that it is a highly expensive company. According to SeekingAlpha, the company trades at a forward P/E ratio of 73, higher than the sector median of 29. Its forward EV/EBITDA stands at 23 compared to the average of 14.

Analysts have a bullish outlook for the Broadcom stock. According to Yahoo Finance, most analysts have a buy rating on the stock. The average estimate is at $1,533, higher than the current level of $1,406. 

Broadcom stock price analysis

AVGO chart by TradingView

The daily chart shows that the AVGO share price has been in a strong bull run in the past few months. Most recently, it has formed what looks like a triple-top pattern, which is often a bearish sign. 

The stock has moved above the Woodie pivot point and is nearing the upper side of the ascending channel. It has jumped above the 50-day and 25-day Exponential Moving Averages (EMA).

The Stochastic Oscillator has moved close to the overbought level of 80. Therefore, the outlook for the Broadcom stock is neutral for now. More upside will be confirmed if it moves above the key resistance point at $1,445, its all-time high.

The alternative scenario is where the stock suffers a big reversal and retests the crucial pivot point at level at $1,345.