Broadcom rises in premarket after Nvidia results lift semis

Broadcom Inc. (NASDAQ: AVGO ) stock rose nearly 2% in Thursday's premarket trading.

NVIDIA Corp.'s (NASDAQ: NVDA ) strong results reinforced demand for artificial intelligence infrastructure.

The broader market also supported the move.

Nasdaq futures climbed 0.90%, while S&P 500 futures gained 0.31%.

NVIDIA's results boosted sentiment across large-cap technology and semiconductor stocks.

Investors also positioned themselves ahead of Broadcom's earnings report on Sept.

2.

Broadcom remains well below its June peak.

However, improving market sentiment and nearby technical support helped attract buyers before the opening bell.

Technical Analysis Broadcom remains in a technical repair phase.

The stock trades 8.1% below its 20-day simple moving average and 6.6% below its 50-day SMA.

It is also 2.2% below its 200-day SMA.

Still, the longer-term trend has suffered less damage.

Broadcom formed a golden cross in April when its 50-day SMA moved above its 200-day average.

Meanwhile, the MACD remains below its signal line, and the histogram is negative.

That suggests the previous rally has lost momentum.

Support sits near $358.

Resistance stands around $407.50.

A lasting recovery would likely require the stock to reclaim its 50-day and 100-day moving averages.

Earnings And Analyst Outlook Broadcom is scheduled to report earnings on Sept.

2.

Analysts expect earnings of $3.16 per share on revenue of $29.44 billion.

That compares with earnings of $1.69 per share and revenue of $15.95 billion a year earlier.

The stock trades at 59.2 times earnings, reflecting a premium valuation.

Broadcom carries a Buy consensus rating with an average price forecast of $511.13.

RBC Capital recently maintained a Sector Perform rating and a $400 forecast.

BMO Capital initiated coverage with an Outperform rating and a $455 forecast.

Erste Group downgraded the stock to Hold in July.

Edge Rankings Broadcom has a momentum score of 40.91 and a growth score of 31.01, according to the Edge scorecard.

Its value score stands at 6.37, highlighting its elevated valuation.

However, Broadcom's quality score of 94.95 remains its main strength.

Therefore, earnings and guidance could determine whether investors believe its fundamentals justify the premium.

ETF Exposure Broadcom has significant exposure through several semiconductor and technology funds: Invesco PHLX Semiconductor ETF (NASDAQ: SOXQ ): 9.94% weighting iShares Semiconductor ETF (NASDAQ: SOXX ): 8.12% weighting First Trust Nasdaq Technology Dividend Index Fund (NASDAQ: TDIV ): 8.05% weighting Because Broadcom holds a large weighting in these ETFs, fund inflows or outflows can drive additional buying or selling in the stock.

AVGO Price Action Broadcom shares rose 1.38% to $360.50 in Thursday's premarket trading, according to Pro.

Image via Shutterstock Read Also: NVIDIA's Biggest AI Bottleneck Isn't Demand—It's Memory