Broadcom reports strong custom AI chip demand; Tomahawk networking ASIC orders remain elevated.
Broadcom shares have rebounded 11% from a recent low of $374.61 reached on July 30, closing at $416.05 on August 12 and reaching an intraday high of $432.73—significantly outperforming the Philadelphia Semiconductor Index, which gained about 3% over the same period. The stock remains 16% below its 52-week high of $495. As the company approaches its fiscal third-quarter earnings release on September 2, investors are weighing whether strong demand for custom AI chips can drive the stock price past the $500 threshold.
The rally has been driven primarily by Broadcom's better-than-expected performance in custom AI chips (ASICs). In the second quarter of fiscal 2026, total revenue reached $22.187 billion, up 48% year-over-year, with AI semiconductor revenue surging 143% to $10.8 billion—nearly half of total revenue. During the earnings call, management disclosed that new AI semiconductor orders in the quarter exceeded $30 billion compared to the $10.8 billion in recognized revenue, providing substantial visibility for future quarters.
Broadcom has secured six hyperscale cloud providers as customers, including Google, Meta Platforms, Anthropic, and OpenAI. In July 2026, the company extended its partnership with Apple through 2031 for supplying multiple generations of custom high-performance chips, validating Broadcom's competitive strength in advanced custom chip design and indirectly supporting its AI ASIC business.
The company reaffirmed its FY2026 AI semiconductor revenue target of approximately $56 billion and raised its FY2027 target to over $100 billion. At the current stock price of $416, the forward P/E ratio stands at approximately 36x based on consensus estimates. Wall Street's average price target of $527.88 suggests potential upside of about 26.88%, while Morgan Stanley maintains an "Overweight" rating with a $502 price target, ranking Broadcom as a core AI beneficiary second only to NVIDIA.
Technically, the stock faces significant headwinds. The first resistance level sits around $432.21, coinciding with the upper Bollinger Band at $433.62; the next target above that is the previous high of $495. Short-term moving averages show a crossover signal with the 5-day moving average crossing below the 20-day, indicating pullback pressure. The MACD remains positive but its histogram is narrowing, signaling weakening upward momentum. Support levels are positioned at $406–$409, $396, and $359. Given dense technical resistance around $432 and insufficient short-term momentum, a breakout above $500 before the earnings report appears unlikely.
Historical patterns add to the headwinds: the stock fell over 11% following earnings reports in December 2025 and June 2026. The market expects Q3 EPS of $3.21, representing 90% year-over-year growth—a target whose difficulty itself creates earnings pressure. Even with results that beat expectations, the stock price could decline if forward guidance fails to meet the most optimistic projections.
A gradual climb toward $500 appears more likely following the September 2 earnings report than a pre-earnings breakout. If management confirms that the revenue trajectory for AI semiconductors remains unimpeded by supply constraints or competitive pressures, and if Q4 guidance remains constructive, the stock could challenge its historical high of $495.