Broadcom shares remain below their 52-week high despite continued optimism from Wall Street and growing regulatory pressure in Europe. AVGO was trading near $363 in premarket activity, compared with a 52-week peak of $495.
EU examines VMware partner rules
European Union officials are questioning cloud providers about their dependence on VMware and whether they can realistically move to competing platforms. Regulators are also examining Broadcom’s certification requirements and whether those rules could unfairly limit cloud companies.
The review comes ahead of a March 31 deadline under Broadcom’s revised partner programme. After that date, some providers could lose the ability to sell VMware subscriptions if the dispute remains unresolved. The European Commission could then open a formal antitrust investigation or impose interim measures.
Broadcom changed VMware’s licensing and commercial structure after completing its $61 billion acquisition of the virtualization software company in 2023. European cloud providers have complained about contract changes and higher costs. If EU authorities find violations, penalties could reach as much as 10% of Broadcom’s annual worldwide revenue.
Analysts maintain positive outlook
Regulatory uncertainty has not stopped analysts from raising or maintaining bullish targets. Piper Sandler upgraded Broadcom to “Strong Buy” with a $460 price target. Oppenheimer reaffirmed its “Outperform” rating with a $535 target, while BMO Capital Markets and KeyCorp each set targets of $575. The analyst consensus was approximately $505.97.
MarketBeat data showed that 29 of 34 tracked analysts rated the stock Buy, one issued a Stable Buy rating and four recommended Hold. DA Davidson remained an outlier with a Neutral rating and a $350 target.
Broadcom opened at $360.83 on Wednesday, below both its 50-day simple moving average of $383 and its 200-day average of $378. Technical resistance was identified near $376.50, with support around $358, while the MACD remained below its signal line.
AI infrastructure remains the main growth driver
The company’s strongest growth story continues to be artificial intelligence infrastructure. Broadcom reported approximately $16.7 billion in AI semiconductor revenue in the latest quarter and expects the business to generate about $115 billion in fiscal 2027 and $230 billion in fiscal 2028.
Demand for custom AI accelerators and networking products from hyperscale customers has supported that outlook. OpenAI has also selected Broadcom for its first custom AI chip, increasing the company’s role in the AI supply chain.
For the third quarter, Broadcom reported earnings of $3.32 per share, above the $3.22 consensus estimate. Revenue reached $29.59 billion, beating the $29.24 billion forecast and rising 85.5% from the same period a year earlier. However, near-term guidance was weaker than expected, prompting Truist to reduce its price target.
Broadcom insiders sold about 61,644 shares worth approximately $24 million over the previous three months. Institutional investors held 76.43% of the company’s stock, while analysts on average expected full-year earnings of $10.36 per share.
