Should You Buy Broadcom (AVGO) Stock Ahead of Its September 2 Earnings Report?

Key Takeaways

• AVGO shares hovered near $397.54 in Monday’s premarket session following a sharp 5% decline on Friday
• Bank of America projects Broadcom’s AI chip financing entity could accumulate $370 billion in senior debt by mid-2029
• The company has revealed up to $29 billion in potential contingent liabilities tied to its initial financing structure
• Wall Street consensus stands at “Moderate Buy” with a mean price target of $493.24
• September 2 earnings are expected to show EPS of $3.16 on revenue of $29.44 billion

Broadcom (AVGO) shares showed minimal movement in Monday’s early trading, hovering around $397.54 after experiencing a significant 5% pullback during Friday’s session. Market conditions appeared supportive, with Nasdaq futures climbing 0.55% and S&P 500 futures advancing 0.15%.

Broadcom Inc., AVGO

Friday’s selloff intensified as market participants began examining the complex financial architecture underpinning Broadcom’s artificial intelligence expansion strategy more closely.

According to Bank of America analyst Tom Curcuruto’s projections, the AI chip-financing entity established by Broadcom could accumulate senior debt totaling $370 billion by the middle of 2029. This substantial debt load would reside within the financing vehicle rather than appearing directly on Broadcom’s consolidated balance sheet.

Nevertheless, the semiconductor giant has committed to guarantee specific customer lease commitments. Additionally, Broadcom has publicly acknowledged exposure of up to $29 billion under the terms of its original financing framework.

While this arrangement aims to accelerate AI infrastructure rollouts for customers, it simultaneously introduces financial complexity and contingent risk as the program expands.

Financial Structure Questions Emerge as Focus Point

Notwithstanding Friday’s retreat, Broadcom’s broader technical framework remains encouraging. Trading at $397.54, the stock sits just 0.5% beneath its 20-day simple moving average of $399.49, while maintaining positions 1.8% above the 50-day SMA and 7.7% above the 200-day SMA.

A bullish golden cross pattern materialized in April, and the MACD indicator continues trading above its signal line, indicating that recent downward momentum may be subsiding.

Overhead resistance emerges around $414.50, while downside support appears near $370, aligned with the 200-day SMA at $369.20.

The company’s September 2 earnings release approaches rapidly. Wall Street projects earnings per share of $3.16, representing substantial growth from $1.69 in the comparable period last year, alongside revenue expectations of $29.44 billion versus $15.95 billion previously.

AVGO currently commands a price-to-earnings ratio approximating 65x, indicating investors are willing to pay a premium multiple. The stock’s 52-week trading range spans from $281.87 to $495.00.

Wall Street Perspectives and Ownership Patterns

Analyst sentiment currently reflects a “Moderate Buy” rating with a consensus price objective of $493.24. Jefferies maintains the most optimistic stance at $550, followed by Bank of America Securities at $530 and UBS at $485. Meanwhile, DA Davidson and Royal Bank of Canada take more conservative positions, both setting $400 targets.

Erste Group moved to a Hold rating in early July. In total, 28 analysts recommend buying the stock while four suggest holding.

Examining institutional positioning, Jefferson Bridge Capital reduced its AVGO holdings by 13% during the second quarter, though the position remains the firm’s fourth-largest at 4.5% of total assets under management. Institutional ownership across the board accounts for 76.43% of outstanding shares.

Corporate insiders have divested approximately $24 million in stock value throughout the past three months, highlighted by a $10 million transaction executed by insider Mark David Brazeal in July.

Broadcom distributes a quarterly dividend of $0.65 per share, translating to an annualized yield of 0.7%.

In its latest quarterly results announced June 3, Broadcom delivered earnings per share of $2.44, surpassing analyst estimates of $2.40. Revenue reached $22.19 billion, representing 47.9% year-over-year growth and narrowly exceeding the $22.13 billion consensus forecast.