Meta-Broadcom Deal Can Push S&P 500 to Milestone All-Time High
Broadcom’s custom AI chip deal with Meta Platforms runs through 2029 and investors are intrigued by the announcement.
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Meta CEO Mark Zuckerberg Arrives in South Korea
One week ago, the S&P 500 was trading near 6,600. The large cap index was trading beneath its 50-day and 200-day moving averages, as the U.S. war with Iran raged on.
Then a cease fire was announced. From April 7 through April 14, the S&P 500 gained 5.3%. The key index ended Tuesday just 11 points below its all-time closing high of 6,978, set on January 27.
Hot Sox
One of the hottest sectors in the S&P 500 right now is the semiconductor industry. The Philadelphia Semiconductor Index (SOX), a bellwether for that sector, closed at an all-time high on Tuesday. It was the tenth consecutive bullish close for the index, which features stocks like Broadcom (AVGO) , Nvidia (NVDA) and Advanced Micro Devices (AMD) among its components.
Broadcom’s Deal with Meta
Will the S&P 500 get its first close above 7,000 this week? AI chipmaker Broadcom and social media giant Meta Platforms (META) could help the index climb above and beyond that milestone.
Broadcom popped 3.6% higher after Tuesday’s close on word that the Palo Alto chipmaker struck a huge deal with Menlo Park-based Meta. The two $1 trillion behemoths will develop the Meta Training and Inference Accelerator, or MTIA, in a deal that extends through 2029.
If Broadcom can hold Tuesday’s after-hours gains, it will trade less than 5% below its all-time closing high of $412.97 (black dotted line), set in December.
Nvidia On the Edge
Another name that is on the verge of a breakout from a consolidation is Nvidia. For nearly six months, this $4.78 trillion AI chipmaker has been stuck in a sideways range (shaded yellow).
Nvidia needs to close above $200 to break out of its doldrums. This stock boasts a five-year cumulative gain of 1135%.
AMD Ready to Break Out?
Advanced Micro Devices has been trapped in a range for over six months (shaded yellow). This stock boasts a cumulative five-year gain of 210%.
If AMD can close above $267, not only will the stock break out of its range, it will reach a new all-time high.
Bottom Line
Chip stocks like Broadcom, AMD, and especially Nvidia led this market higher for years. Now they appear ready to resume their leadership role, just as the S&P 500 appears ready to reach new heights.
Related: How the Evergrande Founder's $42 Billion Fortune Became a Guilty Plea
At the time of publication, Ponsi was long AVGO, NVDA and AMD.
