Broadcom (AVGO) Plunges 3.77% Amid Insider Selling and Valuation Concerns – What’s Next for the AI Giant?

Summary
• AVGO shares trade at $294.23, down 3.77% intraday, with a 52-week high of $317.35 and low of $134.90
• Insider selling exceeds $360M, with CEO Hock Tan offloading $51M in shares
• Analysts project $302.5 median price target, but technicals show RSI at 56.28 and MACD histogram negative
• Hedge funds like Viking Global and Coatue trim stakes, while Tiger Global and Renaissance Technologies add exposure
• The stock’s 109% rally over the past year faces profit-taking pressure as it consolidates near $300

Broadcom’s sharp intraday decline has sparked investor scrutiny amid a mix of bullish fundamentals and bearish catalysts. The stock’s 3.77% drop to $294.23 reflects a tug-of-war between AI-driven growth optimism and valuation concerns. With insider selling, hedge fund trimming, and technical indicators flashing caution, the path forward for AVGO hinges on whether its AI infrastructure and VMware integration can sustain momentum.

Insider Selling and Valuation Pressures Weigh on AVGO
Broadcom’s 3.77% intraday drop is driven by a confluence of factors. Insider selling has surged, with executives offloading over $360 million in shares, including $51 million by CEO Hock Tan. This activity has fueled investor skepticism about near-term upside. Meanwhile, hedge funds like Viking Global and Coatue have trimmed stakes, citing stretched valuation multiples—AVGO trades at 38.46x forward earnings, a premium to peers. Analysts remain bullish, with a median price target of $302.5, but technical indicators like the MACD histogram (-0.41) and RSI (56.28) suggest short-term exhaustion. The stock’s 109% rally over the past year has created profit-taking pressure, exacerbated by a lack of immediate catalysts beyond its VMware integration and AI infrastructure bets.

Semiconductor Sector Mixed as NVDA Trails AVGO’s Decline
The semiconductor sector remains fragmented, with Broadcom’s 3.77% drop outpacing NVIDIA’s 3.12% decline. While both stocks benefit from AI demand, NVDA’s exposure to Chinese export restrictions and margin pressures has dampened its growth trajectory. AVGO, meanwhile, faces valuation concerns despite its 46% AI revenue growth and $15.8 billion quarterly guidance. The sector’s mixed performance reflects divergent strategies: NVDA’s focus on GPU innovation versus AVGO’s hybrid hardware-software ecosystem. As the U.S. and China navigate trade tensions, semiconductors remain a high-risk, high-reward segment.

Options and ETFs for Navigating AVGO’s Volatility
• 200-day average: $221.52 (far below current price)
• RSI: 56.28 (neutral to bearish)
• MACD: 8.89 (signal line: 9.30, histogram: -0.41)
• Bollinger Bands: Upper $317.16, Middle $298.40, Lower $279.65
• Key support/resistance: 30D support $283.29, 200D support $229.56

AVGO’s technicals suggest a short-term bearish bias, with the 200-day average ($221.52) acting as a distant floor. The stock’s 3.77% drop has tested the 200-day support ($229.56), but immediate resistance lies at $298.40 (middle Bollinger Band). For traders, the Roundhill AVGO WeeklyPay ETF (AVGW) at $49.81 (-5.41%) offers leveraged exposure, though its sharp decline mirrors AVGO’s volatility. Two options stand out for short-term positioning:

• AVGO20250829P280 (Put, $280 strike, 2025-08-29):
- IV: 45.73% (moderate)
- Delta: -0.2403 (moderate sensitivity)
- Theta: -0.0859 (moderate time decay)
- Gamma: 0.0133 (moderate price sensitivity)
- Turnover: $823,782 (high liquidity)
- LVR: 85.47% (high leverage)
- Payoff at 5% downside ($279.52): $0.52
- This put offers a high leverage ratio (85.47%) and moderate delta, ideal for capitalizing on a potential breakdown below $280. The high turnover ensures liquidity, while the 45.73% IV suggests market anticipation of volatility.

• AVGO20250829P285 (Put, $285 strike, 2025-08-29):
- IV: 44.47% (moderate)
- Delta: -0.3107 (higher sensitivity)
- Theta: -0.0474 (lower time decay)
- Gamma: 0.0155 (higher price sensitivity)
- Turnover: $391,581 (high liquidity)
- LVR: 62.21% (moderate leverage)
- Payoff at 5% downside ($279.52): $5.52
- This put’s higher delta (-0.3107) and gamma (0.0155) make it responsive to price swings, while the 44.47% IV aligns with market expectations. The $391,581 turnover ensures ease of entry/exit.

If AVGO breaks below $280, AVGO20250829P280 offers a high-leverage, high-liquidity play. For a more aggressive bet, AVGO20250829P285 provides amplified exposure to a potential $285 breakdown.

Backtest Broadcom Stock Performance
The backtest of Broadcom Inc. (AVGO) after a -4% intraday plunge shows favorable performance across various time frames. The 3-Day win rate is 58.11%, the 10-Day win rate is 63.51%, and the 30-Day win rate is 77.36%, indicating a higher probability of positive returns in the short to medium term. The maximum return during the backtest period was 19.11%, which occurred on day 59, suggesting that AVGO often exhibits a rebound following a significant dip.

AVGO at Crossroads: Watch for $280 Breakdown or AI Momentum Rebound
Broadcom’s 3.77% intraday drop has exposed vulnerabilities in its valuation and insider confidence, but its AI infrastructure and VMware integration remain compelling long-term drivers. Short-term traders should monitor the $280 level as a critical support; a breakdown could trigger a retest of the 200-day average ($221.52). Conversely, a rebound above $298.40 (middle Bollinger Band) may reignite bullish momentum. The sector’s mixed performance, with NVIDIA (NVDA) down 3.12%, underscores the need for caution. For now, AVGO20250829P280 and AVGO20250829P285 offer strategic options to navigate this volatility. Investors should also watch for regulatory developments and VMware synergy progress, which could redefine AVGO’s trajectory.