Stock Poised for Record High After Revenue Beat, Stock Split Announcement
Broadcom shares surged more than 14% in Wednesday’s extended-hours trading session after the chipmaker reported better-than-expected fiscal second-quarter revenue, fueled by artificial intelligence (AI) product sales reaching a record high. Following in the footsteps of Wall Street darling Nvidia, Broadcom also announced a 10-for-1 stock split.
Key Takeaways
Broadcom shares jumped in extended trading Wednesday after the chipmaker reported better-than-expected fiscal second-quarter revenue fueled by AI product sales and announced a 10-for-1 stock split.
Broadcom shares have formed an ascending triangle that suggests a continuation of the current longer-term uptrend.
Leading into the chipmaker’s quarterly results, the stock broke out above an ascending triangle on increasing volume, indicating bullish expectations by market participants.
The measuring principle using technical analysis projects a price target in Broadcom shares of $1,745, while the ascending triangle’s top trendline at $1,415 may provide support during retracements.
Shares in Broadcom (AVGO) surged more than 14% in Wednesday’s extended-hours trading session after the chipmaker reported better-than-expected fiscal second-quarter revenue, fueled by artificial intelligence (AI) product sales reaching a record high. Following in the footsteps of Wall Street darling Nvidia (NVDA), Broadcom also announced a 10-for-1 stock split.
Below, we take a closer look at Broadcom’s chart and use technical analysis to identify key levels to watch out for.
Ascending Triangle Breakout Indicates Further Upside
Like the chart of many other tech stocks trading near their all-time high (ATH), Broadcom shares have formed an ascending triangle suggesting a continuation of the current longer-term uptrend. Within the pattern, the price has touched both the upper and lower trendlines several times since the start of its formation in early March to establish clearly identifiable support and resistance levels.
Indeed, leading into the chipmaker’s quarterly results, the stock has broken out above the ascending triangle on increasing volume, indicating bullish expectations by market participants.
Monitor These Key Chart Levels on Broadcom’s Chart
Given the stock sits positioned to climb to a record high on Thursday, investors can forecast a profit target using technical analysis by applying the measuring principle. To do this, simply calculate the distance of the ascending triangle’s widest portion in dollars and add that amount to the pattern’s top trendline.
In this particular case, add $330 to $1,415, which projects a price target of $1,745. This provides a general area on the chart where the stock may run into selling pressure, especially if other indicators, such as the relative strength index (RSI), warn of overbought conditions.
When the stock undergoes retracements, investors should monitor the ascending triangle’s top trendline at $1,415, an area on the chart that will likely flip from prior resistance into future support. In saying that, a breakdown below this technically important level could see the stock revisit lower support around $1,132, where the price finds a confluence of support from the December swing high and rising 200-day moving average.
Broadcom shares rose 14.6% to $1,713.37 in after-hours trading Wednesday.
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In conclusion, Broadcom’s stock is poised for a record high after a revenue beat and stock split announcement. Technical analysis indicates further upside potential with key levels to monitor on the chart. Investors should keep an eye on support and resistance levels as the stock continues its upward trajectory.
