Broadcom Outlook - Technical Weakness and Mixed Analyst Sentiment

Market Snapshot

Headline Takeaway: Broadcom (AVGO.O) faces technical weakness with bearish signals dominating, but remains backed by optimistic analyst ratings and strong cash flows.

News Highlights

• McKinsey weighs in on tariffs and chip supply chains – A new analysis explores how U.S. tariffs may impact the semiconductor industry. Given Broadcom’s exposure to global supply chains, this development could affect its long-term strategy and margins.
• Japan to Offer U.S. Proposals for Cooperation on Rare Earths, Semiconductors – This news suggests potential geopolitical support for semiconductor players like Broadcom. Such cooperation could ease supply constraints and open new markets.
• US Semiconductors ETF SOXX Faces $750M Net Outflow in May 2025 – This large outflow reflects investor caution in the broader sector. While Broadcom has performed well recently, the broader market dynamics could influence investor sentiment.

Analyst Views & Fundamentals

Analysts have shown a strongly positive outlook for Broadcom. The simple average rating stands at 4.32, while the performance-weighted rating is 5.42. These figures suggest that while most analysts are optimistic, there's some dispersion in their views.

The stock has experienced a 21.01% rise in price recently, and these ratings are in line with the current price trend. Analysts are not overly divided, but there's room for caution due to the recent mixed signals from technical indicators.

Key fundamental values include:

• Net profit attributable to parent company shareholders / Net profit: 100.00%
• EV/EBIT: 20.25
• Cash-MV: 1.41
• Net profit attributable to parent company shareholders (YoY growth rate): 203.77%
• Net cash flow from operating activities per share (YoY growth rate): -93.11%
• Total profit (YoY growth rate): 215.95%
• Interest coverage ratio (EBIT / Interest expense): 7.44%

These metrics show strong profitability and cash generation. However, the net cash flow from operating activities per share has declined, which may raise questions about near-term liquidity and operational efficiency.

Money-Flow Trends

Broadcom's recent fund flows indicate positive inflows from larger institutional investors. The overall inflow ratio is 53.84%, with extra-large inflow at 55.81% and block inflow at 54.34%. This contrasts with the negative trends in small and large inflows. The fund-flow score of 7.89 (good) suggests that big money remains confident in the stock.

Key Technical Signals

Broadcom's technical indicators show weak signals and bearish dominance. Here's an overview of the internal diagnostic scores (0-10):

• WR Overbought: 2.67 – Weak overbought condition, suggesting caution.
• RSI Overbought: 1.84 – Very weak overbought condition, reinforcing bearish sentiment.
• Bearish Engulfing: 3.91 – A moderately bearish candlestick pattern.
• MACD Golden Cross: 6.40 – The only bullish signal, indicating a potential trend reversal.

Recent chart patterns include:

• 20250910: WR Overbought and RSI Overbought
• 20250911: WR Overbought and Dark Cloud Cover
• 20250905: RSI Overbought and MACD Golden Cross
• 20250909: Bearish Engulfing
• 20250908: WR Overbought and RSI Overbought

These signals suggest high volatility and uncertainty, with bearish indicators clearly outweighing the few bullish ones.

Conclusion

Broadcom is facing technical headwinds with bearish indicators dominating and an internal diagnostic score of 3.71 (weak). While fundamentals remain strong and analyst ratings are optimistic, the recent chart patterns suggest caution. Investors should consider waiting for a pull-back and monitor upcoming earnings or broader market sentiment for a clearer direction.