🚀 Broadcom ($AVGO) Breaks Out on AI Demand — Buy the Hype or Fade It?

💡Saturday 9/6 Deep Dive Weekend Edition breaks down $AVGO

Hello traders and investors,

For this weekend’s Saturday deep dive, I’m circling in on Broadcom ($AVGO)—a stock that’s been all over the headlines after a monster earnings beat. Anytime a name gaps up double digits and makes Wall Street lean forward in its chair, I want to break it down and see if there’s still juice left for us.

Broadcom isn’t new to the AI conversation, but this week they lit up the scoreboard with Q3 results that smashed expectations, fueled by accelerating AI semiconductor demand. Add in chatter about a fourth major AI customer—speculated to be OpenAI—and you’ve got a stock that just became even harder to ignore.

Let’s walk through what happened, what the chart is telling us, and how I’d trade it both short-term and long-term.

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The Story

Broadcom put up a +26% YoY revenue gain to $9.17B, topping guidance. AI semiconductor revenue surged +63% YoY to $5.2B, and they see that climbing to $6.2B in Q4. That’s not just momentum—it’s acceleration.

The real kicker is the backlog—a record $110B. That’s long-term visibility you don’t see often in semis. Add in a rumored new AI heavyweight customer (possibly OpenAI), and Broadcom now has four top-tier buyers locking in silicon racks.

CEO Hock Tan extending his contract through 2030 also helps. In a sector where leadership turnover can rattle confidence, that’s stability in the middle of a once-in-a-generation AI cycle.

But it’s not all perfect—non-AI revenue was flat. That side of the business isn’t showing the same spark, which means if AI momentum cools, we could see a drag. Still, right now, AI is carrying the load, and the Street is paying attention.

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Technical Breakdown

Here’s what I’m seeing.

• Price Action: $AVGO closed Friday at $334.89, ripping nearly +9.5% on heavy volume. That’s a textbook gap-and-go off earnings, showing buyers are in control.

• Moving Averages:

  • 10-day SMA: $303.42

  • 50-day SMA: $291.44

  • 200-day SMA: $229.65
    Price is comfortably above all three, with the 10-day curling sharply higher. That’s strong momentum, and the moving averages are stacked bullishly.

• Candlesticks: Friday printed a red candle with a long upper wick, meaning the stock opened high, ran up into the $350s, but closed lower than it opened. That shows profit-taking and selling into strength, even though the stock still finished way above the prior day’s close.

• Pattern Watch: The chart has been riding an uptrend since April, and Friday’s surge looks like a fresh breakout continuation after a brief consolidation.

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Indicators

• RSI: 72 → That’s technically overbought territory. Doesn’t mean it has to roll over right away, but it does suggest the stock could need to cool off after such a fast move.

• MACD: Bullish Crossover → The MACD line just hooked above the signal, and histogram bars are turning green. Momentum is shifting back to the upside, and the move is still young.

So yes, overbought on RSI, but momentum says bulls still have gas in the tank.

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Trade Setups