- Broadcom is another huge semiconductor stock.
- It’s the definition of a long-term uptrend.
- AVGO is setting up for a gap-n-go on Friday.
Broadcom (AVGO) isn’t just another semiconductor company.
It’s the second-largest chip maker in the world.
At a market capitalization of $1.2 trillion, Broadcom is worth about $200 billion more than Taiwan Semiconductor (TSM) and about $2 trillion less than Nvidia (NVDA).
It’s also one of the cleanest long-term uptrends on the planet.
What a Long-Term Uptrend Looks Like
Over the last decade, AVGO has returned a compound average annual growth rate of more than 32%.
What stands out?
Every major breakout has led to a multi-quarter rally followed by a shallow consolidation before the next leg higher:
Just look at that long-term uptrend.
AVGO has respected these Fibonacci extensions for decades. And I think that will likely continue.
Last December, price reached its next key extension level and has been consolidating since then.
I think it’s about to break out and make a fresh leg higher.
Here’s why:
AVGO is making new all-time highs relative to its peer group, the VanEck Semiconductor ETF (SMH).
You’ll notice on the chart that the ratio has made a lot of all-time highs.
That’s another uptrend.
We look for consistent outperformance in the best stocks.
And that’s exactly what we have here with AVGO.
AVGO’s Gap-n-Go
Let’s zoom in on recent price action.
AVGO has carved out a textbook base:
I think AVGO is about to resolve this base and make new all-time highs.
Broadcom reports earnings after the closing bell Thursday. And I’m looking for a gap-n-go Friday morning.
Meanwhile, a good earnings reaction from AVGO would also spark a huge rally in the semiconductor industry and the AI trade.
And that’s good for the market at large
Stay sharp,
JC Parets, CMT
Founder, TrendLabs