TLDR
- Broadcom stock was little changed in Monday premarket, trading around $397.54, after falling more than 5% Friday
- A Bank of America analyst estimates Broadcom’s AI chip-financing vehicle could carry $370 billion in senior debt by mid-2029
- Broadcom has disclosed up to $29 billion in potential exposure under its initial financing arrangement
- Analysts hold a “Moderate Buy” consensus with an average price target of $493.24
- Broadcom is set to report earnings on Sept. 2, with analysts expecting EPS of $3.16 and revenue of $29.44 billion
Broadcom (AVGO) stock was little changed in Monday’s premarket, trading at $397.54, after dropping more than 5% on Friday. Nasdaq futures were up 0.55% and S&P 500 futures gained 0.15%, providing a slightly firmer backdrop.
The stock’s Friday slide came as Wall Street started paying closer attention to the financing structure behind Broadcom’s AI expansion.
Bank of America analyst Tom Curcuruto estimates that Broadcom’s AI chip-financing vehicle could carry as much as $370 billion in senior debt by mid-2029. That debt would sit with the financing vehicle itself, not directly on Broadcom’s balance sheet.
However, Broadcom has agreed to backstop certain customer lease obligations. The company has also disclosed up to $29 billion of potential exposure under its initial financing arrangement.
The structure is designed to speed up AI infrastructure deployments, but it also adds a layer of financial risk as the platform scales.
AI Financing Concerns Take Center Stage
Despite the Friday drop, Broadcom’s longer-term technical picture still looks constructive. At $397.54, the stock sits 0.5% below its 20-day simple moving average of $399.49, but 1.8% above its 50-day SMA and 7.7% above its 200-day SMA.
A golden cross formed in April, and the MACD remains above its signal line, suggesting the recent selling pressure may have eased.
Key resistance sits at $414.50. Key support is around $370, near the 200-day SMA of $369.20.
Broadcom reports earnings on Sept. 2. Analysts expect EPS of $3.16, up from $1.69 a year ago, and revenue of $29.44 billion, compared to $15.95 billion in the prior year period.
The stock trades at a price-to-earnings multiple of around 65, reflecting a premium valuation. Its 1-year range is $281.87 to $495.00.
Analyst Ratings and Institutional Activity
The analyst consensus sits at “Moderate Buy” with an average price target of $493.24. Jefferies has a $550 target, Bank of America Securities has $530, and UBS sits at $485. DA Davidson and Royal Bank of Canada are more cautious, each with a $400 target.
Erste Group downgraded the stock to Hold in early July. Overall, 28 analysts rate it Buy and four rate it Hold.
On the institutional side, Jefferson Bridge Capital trimmed its Broadcom position by 13% in Q2 but the stock remains its fourth-largest holding at 4.5% of its portfolio. Institutional investors collectively own 76.43% of AVGO.
Insiders have sold around $24 million worth of stock over the past 90 days, including a $10 million sale by insider Mark David Brazeal in July.
Broadcom pays a quarterly dividend of $0.65 per share, equating to a 0.7% annualized yield.
In its most recent quarter reported June 3, Broadcom posted EPS of $2.44, beating estimates of $2.40. Revenue came in at $22.19 billion, up 47.9% year over year and just above the $22.13 billion consensus.
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