New Buy Signal for AI Name That's Beating Nvidia

I hope you’re not tired of reading about AI-related stocks. I enjoyed writing Tuesday's article on Tempus AI TEM, and sharing my trading strategy for that stock with you.

Today, we’ll examine a well-known name in the AI chipmaker sector, Broadcom AVGO. Broadcom is often overshadowed by competitor Nvidia NVDA, but in recent months, the former has outperformed the latter.

Broadcom has rallied 42% over the past six months, while Nvidia has only managed a 6% gain over that stretch. The San Jose-based semiconductor manufacturer has a slight advantage over Nvidia when comparing year to date returns. 

Earnings Were Just OK

Last week, Broadcom produced a solid, if unspectacular, earnings report. Broadcom beat earnings and revenue estimates, but not by enough to excite investors.

Broadcom’s stock buyback plan also failed to spark significant buying interest. The company authorized a $10 billion in stock repurchases by the end of this year. In its second fiscal quarter of 2025, ending in May, Broadcom repurchased shares worth $4.2 billion.

Any good news from Broadcom’s June 5 earnings report was overshadowed by the company’s somewhat disappointing forward guidance. As a result, shares of Broadcom have lost about 7% of their value since the June 4 close. 

Eighty-Percent Gain in Two Months

From April 7 (point A) through June 4 (point B), shares of Broadcom went on a tear, gaining an impressive 80% in just under two months. After such a fierce rally, it’s not surprising that the stock would sell off after reporting earrings.

If the stock continues to pull back, I’ll add to my current Broadcom position at $220 (point C). This is the location of the 38.2% Fibonacci retracement of the stock’s recent two-month rally (point D). 

Broadcom’s 50-day (blue) and 200-day (red) moving averages experienced a bullish crossover in mid-May (point D). Both moving averages are rising, a bullish sign.

If you don’t have the patience to wait for a buy signal at $220, consider using a simple trendline strategy for Broadcom. This technique could be used to justify a buy near $244 — right near Tuesday’s closing price. 

Broadcom reached its all-time closing high on June 4 — something that Nvidia hasn’t managed since early January. The S&P 500 and the Nasdaq Composite also haven’t reached fresh highs in several months, although they are getting close.

It won’t be long until the major indexes reach new highs. Concerns about tariffs have somewhat abated, and momentum is strong. As they used to say in the early days of Wall Street, don’t fight the tape. 

At the time of publication, Ponsi was long AVGO.