TLDR
- Broadcom (AVGO) closed Friday, October 16, at $328.75, down 4.52% as chip stocks sold off.
- Concerns over AI funding, higher borrowing costs and stretched valuations are pressuring the sector.
- Melius Research analyst Ben Reitzes still has a $610 price target on Broadcom.
- Third-quarter revenue hit $29.6 billion, up 86% from a year ago.
- Broadcom guided fourth-quarter revenue to about $34.8 billion.
Broadcom (AVGO) stock closed Friday at $328.75, down $15.58, or 4.52%. Traders pulled back from AI names across the chip sector.
Trading volume ran near 30 million, well above the 30-session average of 24 million. A lot of investors were heading for the exits at once.
The Nasdaq had its worst week since June. Chip stocks took much of the heat.
Three worries are driving the mood: how AI infrastructure gets paid for, higher borrowing costs and rich valuations. Broadcom got swept up in all three.
CEO Hock Tan added to the unease at a conference on October 13. He warned about speculative excitement around AI spending.
Strong Results Still on the Books
The latest numbers do not match the gloomy price action. Fiscal third-quarter revenue reached $29.6 billion, up 86% from a year earlier.
GAAP diluted earnings were $2.68 per share, and adjusted earnings came in at $3.32. Free cash flow was $13.7 billion, or 46% of revenue.
Broadcom guided fourth-quarter revenue to about $34.8 billion. That implies annual growth near 93%.
The custom AI chip business sits at the center of the story. Broadcom worked with OpenAI on the JalapeƱo inference chip, unveiled in June 2026.
The chip is meant to run AI queries efficiently. It could help Broadcom push into a market Nvidia largely controls.
Analyst Targets and Price Levels
Melius Research analyst Ben Reitzes holds a $610 price target. That sits about 86% above Fridayās close.
He expects Googleās custom AI chip spending to grow through 2031. He also sees openings tied to OpenAI and Anthropic.
JPMorgan analyst Harlan Sur is positive on the company too. Competition from Marvell and other custom chip designers remains a risk to market share.
The stock trades near 42 times trailing earnings. That is a rich price tag if AI spending cools.
The October 16 low of $328.58 is the first support level buyers will watch. Below that, the next zone sits at $300 to $310.
On the upside, resistance starts at $344 to $346. A bigger recovery would need $360 to $377, where the stock traded earlier in October.
Broadcomās next benchmark is its fourth-quarter revenue forecast of about $34.8 billion.
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