TLDR
- Broadcom (AVGO) closed at $328.75 on Friday, October 16, down 4.52% on heavy chip selling.
- Worries about AI spending, higher borrowing costs and rich valuations are weighing on the sector.
- Melius Research analyst Ben Reitzes keeps a $610 price target on the stock.
- Broadcom posted third-quarter revenue of $29.6 billion, up 86% from a year ago.
- Management forecast fourth-quarter revenue of about $34.8 billion.
Broadcom (AVGO) ended Friday’s session at $328.75, down $15.58, or 4.52%. Investors kept trimming their AI exposure as semiconductor names took a beating.
About 30 million shares changed hands. That compares with a 30-session average of 24 million, so trading was busier than usual.
It was a rough week for chips. The Nasdaq logged its steepest weekly loss since June.
Broadcom got caught in the selling. Investors are worried about how AI infrastructure gets financed, how long rates stay high, and whether huge spending plans will pay off.
Those worries grew after CEO Hock Tan warned about speculative excitement around AI investments. He spoke at a conference on October 13.
The Numbers Behind the Stock
The business itself still looks strong. Fiscal third-quarter revenue hit $29.6 billion, an 86% jump from last year.
GAAP diluted earnings came in at $2.68 per share. Adjusted earnings were $3.32 per share.
Free cash flow was $13.7 billion, or 46% of quarterly revenue. That is a lot of cash for one quarter.
Management expects fourth-quarter revenue of about $34.8 billion. That would mean annual growth of roughly 93%.
The custom AI chip business is central to the story. Broadcom teamed up with OpenAI on the Jalapeño inference chip, shown off in June 2026.
The chip is built to handle AI queries efficiently. It could give Broadcom a bigger foothold in a market Nvidia currently leads.
What Analysts and Technicals Say
Reitzes of Melius Research sticks with his $610 target. That implies about 86% upside from Friday’s close.
He expects Google’s custom AI chip spending to keep growing through 2031. He also points to openings with OpenAI and Anthropic.
JPMorgan’s Harlan Sur is also positive on Broadcom’s place in the market. Still, competition from Marvell and other custom chip makers could eat into share.
Valuation is a sore spot. The stock trades near 42 times trailing earnings, which leaves little room for a stumble.
On the charts, the October 16 low of $328.58 is the first level buyers will watch. A drop below it could open the way toward $300, while a move above $346 would help the short-term picture.
Broadcom’s next big marker is its fourth-quarter revenue forecast of about $34.8 billion.
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