Broadcom Q4 Preview: Bullish Setup Hinges on Positive Earnings and Guidance

Broadcom (NASDAQ:AVGO) is a multinational technology company that designs, develops, manufactures, and supplies a wide range of semiconductor and infrastructure software products. The company's products are used in various industries, including data centers, networking, software, broadband, wireless, storage, and industrial.

Semiconductor Solutions: This segment focuses on designing and manufacturing analog and digital semiconductors for various applications, such as broadband communications, wireless communications, enterprise storage, and industrial automation. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing custom silicon solutions; serializer/deserializer application specific integrated circuits; optical and copper, and physical layer devices; and fiber optic components and RF semiconductor devices.

Infrastructure Software: This segment provides software solutions for data centers, networking, cybersecurity, and other infrastructure needs.

AVGO Revenue Break Overview:

Broadcom Inc.’s revenue for the last year amounted to 35.82 B USD, the most of which - 28.18 B USD - came from its highest performing source now, Semiconductor Solutions, the year earlier bringing 25.82 B USD. The greatest contribution to the revenue figure was made by China (Including Hong Kong) — last year it brought Broadcom Inc. 11.53 B USD, and the year before that — 11.64 B USD.

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AVGO Q4 2024 reports earnings at 4:15 PM ET Thursday Dec 12, 2024

• 44 beats since Q2 2013
• 2 Misses since Q3 2012

Analyst Ratings:

Earnings Expectation:

Price Performance:

Fundamentals:

Option Statistics:

• Put/Call ratio for Dec 13 expiry is 0.6651% more calls than puts which suggests the following three scenarios:
• With Put/Call ratio is between 0.4015 to 0.945 for the next four upcoming expiries suggest that the traders are bullish.
• Earning miss or lower guidance could trigger a sell-off as the players are long calls.
• Earning and guidance in line or better than estimates will trigger a sharp rally.

Probability Analysis Chart:

Probability range = 1 std deviation

Key Highlights:

• Apple (NASDAQ:AAPL) is collaborating with Broadcom (AVGO) on custom server processor for running AI applications in data centers.
• AVGO clients include Alphabet (NASDAQ:GOOGL) and Meta (NASDAQ:META) sitting on huge AI 2025 expansion plans.
• Its strong partner base are Microsoft (NASDAQ:MSFT), Arista Networks (NYSE:ANET), Dell Technologies (NYSE:DELL), and Juniper (NYSE:JNPR).
• The company’s focus on shifting VMware (NYSE:VMW) products to a subscription-based model is expected to have driven top-line growth in the upcoming earnings.

Technical Analysis Perspective:

• AVGO is trading around the all-time high range between 186.50 – 181.50 band.
• Prices have been hovering inside a bullish ascending triangle since April 2024.
• AVGO needs to penetrate and hold gains above 186.50 to initiate a fresh leg higher to 197 with more room to 210.
• Earnings are the perfect catalyst to break on the upside provided they are in line or better than expected with positive guidance.
• A rejection of 186.50 obstacle post earnings indicates a drop to 168 with more downside room to 157.75 is likely.

AVGO Weekly Chart:

CRM Seasonality Chart

• AVGO closes 7.8% higher in December 81% of the time since 2009.

Conclusion:

AVGO has the right bullish setup, earnings are the catalyst to trigger the setup provided the earnings are positive and with guidance.