Broadcom stock rises as JPMorgan backs AI growth, sees 54% upside

Broadcom AVGO shares moved higher on Wednesday as investors returned to semiconductor stocks and analysts at JPMorgan reiterated their bullish outlook on the chipmaker.

The bank argued that the market continues to underestimate the company's long-term artificial intelligence opportunity.

The stock rose 5.17% during trading.

The rebound followed a difficult month for Broadcom shares, which had fallen 14% in June after the company's latest guidance disappointed investors and triggered a broader selloff across AI-related semiconductor stocks.

Despite the recent weakness, Broadcom remains up 13% year to date and has gained 58% over the past 12 months.

Shares are currently trading roughly 17% below their record closing high of $481.57 reached on June 2.

JPMorgan remains bullish despite recent pullback

JPMorgan analysts Harlan Sur and Mayur Ramdhani reiterated their Overweight rating on Broadcom shares and maintained a $580 price target, implying approximately 54% upside from Tuesday's closing price.

The analysts said they would be buyers following the recent decline.

Sur wrote that JPMorgan “would be aggressive buyers at current levels” as the company continues to have “significant dominance” in advanced chip packaging design, cadence of new designs, its intellectual property portfolio, and a track record of execution.

The bank pointed to Broadcom's long-standing relationship with Alphabet's Google as evidence of its competitive position.

According to JPMorgan, Broadcom has helped Google bring 14 advanced chip designs to market over the past 12 years.

Investor concerns have recently focused on comments from Chief Executive Officer Hock Tan suggesting that Google could diversify parts of its supply chain and that future semiconductor growth may weigh on gross margins.

Those remarks contributed to increased caution surrounding the stock.

Google partnership remains key growth driver

JPMorgan dismissed concerns that Google's next-generation TPU v9 chip program has been delayed or canceled.

The firm stated that “contrary to the recent noise from sell-siders,” Broadcom and Google haven’t delayed or canceled the next-generation Google TPU program and that the Broadcom team remains on track to ramp up production.

According to reports cited by Futunn News, Google signed a five-year agreement with Broadcom in March covering the next four generations of Tensor Processing Units.

JPMorgan believes the agreement provides Broadcom with AI revenue visibility through 2031.

The bank also argued that concerns regarding Google's internal chip development efforts are overstated.

Analysts estimate Google's in-house chip team remains at least 18 months behind Broadcom, limiting competitive risks in the near term.

Broadcom currently designs custom AI chips for six major customers, including Alphabet and OpenAI, while maintaining a leadership position in networking chips used within AI data centers.

The company has previously outlined a goal of generating $100 billion in AI chip revenue by 2027.

Technical picture remains mixed

While long-term momentum remains positive, technical indicators suggest investors are still rebuilding confidence after the recent selloff.

Broadcom trades approximately 6% above its 100-day simple moving average of $366.95 and around 8% above its 200-day moving average of $358.91.

A golden cross formed in April, reinforcing the longer-term bullish trend.

However, the stock remains below key short-term resistance levels.

Shares trade roughly 6.3% below the 20-day moving average and nearly 5% below the 50-day moving average.

Momentum indicators remain cautious as the moving average convergence divergence (MACD) indicator continues to sit below its signal line.

Analysts are monitoring resistance near $429.50, while support around $370.50 aligns with the stock's longer-term moving averages.

Wall Street's broader view remains overwhelmingly positive.

According to FactSet, 51 of 55 analysts covering Broadcom rate the stock a Buy, while the average price target stands above $500 per share.