Broadcom Stock Price Forecast: $30 Billion Apple Partnership Ignites Shares, Expected to Rise to $500 in July

TradingKey - As of the close on July 8, Eastern Time, Broadcom ( AVGO) shares rose 4.83% to $388.69, with an intraday high of $395.09. The stock showed notable strength on Wednesday, with the direct catalyst being Apple ( AAPL) expanding its chip supply partnership with Broadcom. This means Broadcom's custom chip business is supported by long-term orders from a major customer, while also reinforcing its key position in Apple's supply chain.

Why Broadcom Shares Are Rising?

The core driver of Wednesday's stock gain was the expanded chip supply partnership between Apple and Broadcom. According to reports, Apple plans to purchase more than $30 billion in chips from Broadcom under a long-term agreement extending through 2031, primarily involving radio frequency chips such as FBAR filters used for wireless connectivity in Apple devices. Broadcom will also invest $1.5 billion to expand its Fort Collins facility and facilitate the production of more than 15 billion chips in the U.S.

For Broadcom, this partnership significantly enhances its long-term revenue visibility. Apple is one of the most critical customers in the global consumer electronics sector, and Broadcom's ability to secure multi-year orders from Apple demonstrates that it still possesses a strong technological moat in the custom chip field. Such long-term agreements help mitigate the impact of the consumer electronics cycle on Broadcom's revenue, while also shifting market focus back to the stability of its non-AI business.

Long-Term Logic Supporting Broadcom’s Stock Price Rise Still Lies in Semiconductor Business

In the medium to long term, the semiconductor business remains the key driver supporting Broadcom's stock price growth. Notably, Broadcom's semiconductor business does not rely solely on a single type of chip; instead, it spans multiple segments, including custom AI chips, network switching chips, optical communication connectivity, wireless RF chips, and storage connectivity solutions. This positions Broadcom as a provider of underlying connectivity and custom chips in AI infrastructure development.

In AI data center construction, the most familiar investment thesis for the market is Nvidia's GPUs. However, as large cloud service providers continue to expand AI clusters, high-speed connectivity between GPUs, servers, and data centers has also become increasingly critical. The more AI servers there are, the higher the demand for high-speed data transmission, low-latency networking, and high-bandwidth interconnects—which is precisely Broadcom's area of strength. Broadcom has long-standing expertise in ethernet switching chips, network controllers, PCIe switches, optical communication connectivity, and custom ASICs, enabling it to benefit from the networking and connectivity demands driven by the expanding scale of AI clusters.

Meanwhile, Broadcom's custom AI chip business is also expanding the market's valuation potential. Unlike general-purpose GPUs, custom ASICs are typically designed for large cloud service providers or internet platforms to handle specific AI training, inference, or internal workloads. Although these chips have longer development cycles and high customer concentration, once integrated into the supply chains of major customers, order stability and revenue scale can be highly substantial. For Apple, Google, Meta, the OpenAI ecosystem, and large cloud providers, reducing AI computing costs, improving energy efficiency, and decreasing reliance on a single GPU supplier are long-term trends, which provides ample growth room for Broadcom's custom chip business.

In terms of financial data, Broadcom's latest second-quarter revenue reached $22.187 billion, representing a 48% year-over-year increase; of this, AI semiconductor revenue reached $10.8 billion, up 143% year-over-year. Management expects third-quarter AI semiconductor revenue to grow by over 200% year-over-year to $16 billion, indicating that the AI business is no longer just a long-term narrative but is rapidly translating into actual revenue. Compared to traditional cyclical semiconductor stocks, Broadcom's advantage lies in its high visibility of AI orders, while its software business and long-term customer agreements also provide a measure of earnings stability.

Overall, as long as the investment cycle for AI data centers does not cool down significantly, Broadcom's semiconductor business will continue to support the stock price's upward momentum in the future.

Broadcom Stock Price Analysis: July Price Poised to Rise to $500

Broadcom weekly stock chart, Source: TradingView

Looking at the weekly chart of Broadcom's stock price, throughout the entire month of June, Broadcom's share price underwent a continuous correction, pulling back from its all-time high of $495 to a low of $356.43, representing a decline of over 15%. However, after falling to the Fibonacci 0.236 retracement level of $356 last week, the stock price found some support. Boosted by positive news regarding an expanded partnership with Apple this week, the stock is expected to close in positive territory to confirm a halt to the decline, suggesting that the upward trend will continue.

Meanwhile, in the moving average system, the SMA60 and SMA144 maintain a bullish alignment, indicating that the upward trend has strong sustainability.

At present, the primary resistance level to watch above for Broadcom's stock price is around $414. If the stock price can decisively break above and hold steady over this level, the upside potential toward its all-time high of $495 will open up, and it could even further refresh its record highs, with the potential to test the $500 mark.