Chip Powerhouse Revolutionizes AI As Yet Another Breakout Nears
   
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MATTHEW GALGANI04:00 PM ET 07/14/2023
The demand to infuse artificial intelligence into an ever-increasing range of industries only continues to grow. To further spur that trend, semiconductor giant Broadcom ( AVGO) unveiled the industry's highest-performance fabric for AI networks earlier this year. That has AVGO stock laying the foundation for another breakout after already rising 42% from its prior buy point.
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With a 97 Composite Rating, Broadcom earns a spot among its top-rated peers in the fabless semiconductor group in IBD Stock Checkup.
Fellow leaders include Allegro MicroSystems ( ALGM), Lattice Semiconductor ( LSCC), Rambus ( RMBS), Monolithic Power Systems ( MPWR) and Nvidia ( NVDA).
The group ranks a very strong No. 3 out of the 197 industries IBD tracks.
As Nvidia stock and others show strength in or near new buy zones, AVGO stock is just 4% shy of a 921.78 entry in a second-stage consolidation. Broadcom showed resilience Thursday, coming off its end the session right around Wednesday's closing price.
AVGO Stock, Nvidia Lead Semiconductor Stocks To Watch
From December through most of May, AVGO stock etched a long cup with handle. Just before reporting quarterly earnings on June 1, Broadcom bolted past the 677.76 buy point. The stock locked in a gain of more than 19% for the week ended May 26. The stock has held the bulk of those gains as it readies a new move. The 10-week moving average line continues its sharp rise, as the relative strength line hits a 52-week high.
Broadcom came off Friday's highs to close out the week, but volume on the dip was well below average.
Clearly showing the strength of the group, Nvidia, Rambus, Lattice, Mobileye and MPWR are all powering continued climbs. Nvidia popped to a nearly 5% gain Thursday. It initially added to those gains early Friday but reversed to close down over 1%. The weekly chart still shows strength, but keep an eye out for a possible pullback to digest the AI leader's huge move since January.
LSCC stock and others in the table below also retreated Friday as the Nasdaq come off Friday's highs but closed the week toward the top of the price range.
CompanySymbolComp RatingEPS RatingRS RatingSMR RatingA/D Rating | Allegro MicroSystems | ALGM | 99 | 99 | 97 | A | B+ | | Lattice Semiconductor | LSCC | 99 | 99 | 94 | A | C+ | | Rambus | RMBS | 99 | 97 | 98 | A | B+ | | Nvidia | NVDA | 99 | 68 | 99 | B | A- | | Monolithic Power Systems | MPWR | 98 | 98 | 92 | A | B | | Broadcom | AVGO | 97 | 95 | 96 | A | B+ | | Mobileye Global | MBLY | 97 | 94 | 86 | A | B- |
Broadcom Taps AI To Keep Rising
Headquartered in the heart of Silicon Valley, Broadcom focuses on category-leading semiconductor and infrastructure software solutions. In April, the company unveiled Jericho3-AI to deliver the industry's highest-performance fabric for artificial intelligence networks.
Jericho3-AI revolutionizes AI networking with best-in-class capabilities, including perfect load balancing and congestion-free operation. The features culminate in significantly shorter job completion times for any AI workload.
Broadcom earns an A SMR Rating, which tracks sales growth, profit margins and return on equity. It boasts a 90.1% annual pretax profit margin and a 69.3% annual ROE. Revenue growth has come in at $8.1 billion to nearly $9 billion in each of the last five quarters.
Over the last three quarters, Broadcom has generated average earnings growth of roughly 24%, including a 14% gain last quarter to $10.32 cents a share. Analysts forecast 10% EPS growth for the full fiscal year.
Look for Broadcom to continue its push into AI networks to keep driving AVGO stock and peers to new heights. Nvidia stock jumped to an all-time high Thursday before pulling back on Friday. Volume for the day was well above average.
Broadcom ( AVGO)
$888.58 41.83 4.94%
600800Price7,990,000Sep 23Jun 23Mar 23Dec 22Sep 22Jun 22Mar 22Dec 21Sep 21
07/14/2023 (Market Close)
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