Broadcom (AVGO) has become ridiculously oversold.

Now sitting at support dating back to early December, it’s also over-extended on RSI, MACD and Williams’ %R. From its last traded price of $171.32, we’d like to see it initially retest $190.

Recent earnings have also been strong for the company.

In fact, the company’s adjusted EPS of $1.60 was better than estimates for $1.50. Sales, up 25% year over year, came in at $14.92 billion, which beat estimates of $14.61 billion.

“Broadcom’s record first quarter revenue and adjusted EBITDA were driven by both AI semiconductor solutions and infrastructure software. Q1 AI revenue grew 77% year-over-year to $4.1 billion and infrastructure software revenue grew 47% year-over-year to $6.7 billion,” said Broadcom CEO Hock Tan.

“We expect continued strength in AI semiconductor revenue of $4.4 billion in Q2, as hyperscale partners continue to invest in AI XPUs and connectivity solutions for AI data centers.”

For the second quarter, the company expects for revenue to come in at $14.9 billion, which is also above expectations for $14.59 billion. Adjusted EBITDA is expected to be about 66% of total revenue. Plus, the stock, which yields about 1.4% just paid out a quarterly dividend of 596 cents per share on March 31.

Analysts at Daiwa just upgraded the AVGO stock to a buy rating with a price target of $225.

The firm sees “four strong drivers” for Broadcom in 2025, and going forward into the future. The drivers are the company’s application-specific integrated circuit processors, networking, the VMware acquisition continuing to provide growth, and core semiconductor business, which is getting close to growing after two weak years, the analyst tells investors in a research note. Daiwa says that with the shares down 33% from the recent December 2024 high, Broadcom is “attractive at these levels,” as noted by TheFly.com.

With all of that good news, we’d take full advantage of recent weakness.

Sincerely,

Ian Cooper