Broadcom Stock Nears Earnings: Can AVGO Break $379 After Nvidia Rally?

TradingKey - Broadcom has one of the most anticipated semiconductor catalysts when it reports fiscal third quarter 2026 numbers after Wednesday’s close. Broadcom had a strong August 27, closing at $371.54, up 4.5% based on the renewed outlook for Nvidia and its spending on AI infrastructure. Beyond fiscal Q3 2026 results, investors will determine if they can justify their high expectations for custom accelerators, networking and VMware. Construction of the recent rebound is positive, but $379-$383 is a tough resistance.

Q2 Set a High Bar for Growth and Cash Flow

In fiscal Q2 2026, the last reported quarter by Broadcom, the company’s revenue grew by 48% YoY to a new record of $22.19 billion. On a year-over-year basis, GAAP net income increased by 88% to $9.31 billion, and non-GAAP EPS increased by 54% to $2.44. Adjusted EBITDA was 69% of revenue, or $15.24 billion.

The strong record continued for Broadcom’s cash generation. For fiscal Q2 2026, cash provided by operations totaled $10.49 billion with capital expenditures of $231 million, yielding a free cash flow of $10.26 billion, which was 46% of revenue. This capital-light structure gives Broadcom a lot of flexibility to pursue the development of AI, along with dividend and debt pay down activities.

AI Revenue Is the Number That Matters on September 2

In Q2 2026, semiconductor revenue for AI reached $10.8 billion, an increase of 143% from the prior year, and even exceeding Broadcom’s prior guidance. For Q3 2026, management has guided the revenue target to be approximately $16.0 billion, or an expected increase of greater than 200%. In addition, if Broadcom is able to achieve its consolidated revenue guidance of $29.4 billion, AI semiconductors would represent more than 50% of the sales in that quarter.

Absolute growth is insufficient. Broadcom, even with the consensus slightly adjusted, still missed on Wall Street’s Q2 revenue estimate, and the company even predicted Q3 AI semiconductor revenue to be $16 billion. The stock sold off, even after achieving record growth, demonstrating a considerable upward shift in goals.

OpenAI Jalapeño Strengthens the Custom-Chip Story

On June 24, Broadcom and OpenAI announced Jalapeño, OpenAI’s first custom Intelligence Processor for large language models with the capability to deploy at the gigawatt scale and across multiple generations.

An update on August 25 strengthened this announcement even further. OpenAI commented that in initial tests, Jalapeño achieved higher throughput per kilowatt and lower token latency than the servers that were part of their comparison. Commercial deployment of Jalapeño is projected to occur by the end of 2026, with a larger scale-up in 2027, thus confirming Broadcom’s position in the proprietary AI silicon market.

Broadcom Still Targets $100 Billion in AI Chip Revenue

At a recent event, CEO Hock Tan stated that Broadcom is firmly committed to its target of achieving more than $100B in annual AI chip sales by 2027. In addition, Broadcom projects that it will be able to support more than 10 gigawatts of AI chip capacity within that time frame. This target provides Broadcom with not just custom AI chip accelerators, but also AI networking, which is another opportunity to benefit from the same waves of infrastructure investment.

Broadcom’s current main risk is potentially losing customers. Google’s recent expansion of its Marvell partnership provides Google with the opportunity to potentially achieve up to $120 billion of qualifying Marvell revenue through fiscal 2033 if performance targets are met. Broadcom’s stock price fell over 5% on the day that news was released.

However, most analysts anticipated that the announcement actually signaled Google was adding a new supplier instead of an abandonment of its relationship with Broadcom. This week’s Marvell earnings confirmed that the current rivalry is real and the largest expected Google-related sales will not materialize until fiscal years 2029.

VMware Explore Adds a Second Catalyst Next Week

VMware Explore 2026 will take place from August 31 to September 3 in Las Vegas, and Broadcom’s upcoming semi-conductor earnings will collide with the event. VMware Explore offers over 400 technical sessions focused on the private cloud, application security, and infrastructure and AI, and will continue to address the increasing interest for private or hybrid AI environments.

VMware’s cloud technologies are important because many large enterprises and governments are interested in private or hybrid AI environments and Broadcom’s August updates to vDefend and Avi Load Balancer make security and AI operations more closely align to VMware Cloud Foundation.

AVGO Technical Analysis: $379-$383 Is the Breakout Zone

AVGO is shown at the $371.24 level, and the last completed session closed at $371.54 on August 27. The chart reference is accurate. Broadcom has bounced back sharply from the $350.27 support area, but the price is still contained within the larger descending structure.

Broadcom Stock Price Chart - Source: Tradingview

The first pivot is at $367.88, which is near the 23.6% Fibonacci retracement area. Keeping price above that level will keep the recovery intact. A breakout above $378.74 - $379.00 would provide the structure improvement, but a solid breakout would require clearing the moving average and resistance area at $383.46. Above that, the next target levels are at $387.61 and $396.64.

The RSI at 56 is above the signal line, which indicates positive, strengthening momentum, although not overbought. If price breaks the support at $367.88, then attention would shift to $360.83 and $350.27.

Key Levels

·       Last closed at: $371.54

·       First support: $367.88

·       Secondary support: $360.83

·       Major support: $350.27

·       Breakout zone: $378.74 - $383.46

·       Upside targets: $387.61 and $396.64

·       RSI: Around 56, improving but not overbought

What should investors watch in Broadcom earnings?

The key points will be the Q3 revenue figure vs the $29.4B expectation, AI semiconductor revenue vs the $16B expectation, Q4 guidance, custom-chip visibility, networking demand, free cash flow and an update to the $100B 2027 AI revenue target, as well as any commentary on Google and OpenAI.

Is AVGO bullish heading into earnings?

We are bullish on Broadcom (AVGO) as we think the rebound has been constructive above $367.88. However, the stock will need to break through $379-$383 in order to be considered in the clear, until then it should be considered a technical call. If this level is broken, the stocks that should be targeted for this breakout are $387.61 and $396.64, failure to do so will send the stock back to $360.83 and $350.27.

Bottom Line

Broadcom will enter next week with substantial AI growth, a major free cash flow improvement, and two important catalysts: VMware Explore and the company’s earnings on September 2. The backdrop related to Nvidia and Jalapeño provides further support to Broadcom’s custom-silicon program that is also a high-profile AI growth opportunity. The risk is that the market has set a high expectation of what constitutes positive results. For AVGO, if the stock can break the level of $379-$383, it will be strongly bullish to consider it a confirmation, if the earnings call fails to mention that $16 billion of Q3 AI revenue was a significant jump and not peak, it will be strongly bearish.