Broadcom (AVGO) stock is trading lower after surging after the semiconductor company announced a new deal with OpenAI. Broadcom shares rose nearly 10% on Monday after the company confirmed a major partnership with OpenAI to develop custom AI chips. However, the stock price has since fallen to $349.
Yesterday, buying momentum in AVGO stock gained momentum following its highest trading volume in over a month. This move coincided with AVGO’s RSI regaining the 50 threshold, indicating the return of bullish price momentum. As of this writing, Broadcom stock is up 50% year-to-date, one of the company’s best single-year results ever. Broadcom’s stock price soared as analysts began weighing the revenue potential of the multiyear deal. For AVGO, this partnership will help the company increase its dominance in the AI semiconductor market, as the need for bespoke silicon solutions in all technology areas is increasing.
OpenAI and Broadcom have signed a deal to build up to 10 gigawatts of AI accelerator. This is a large amount of electricity, consuming as much electricity as a large city. This partnership marks another strategic move by OpenAI to expand the infrastructure that supports ChatGPT’s 800 million weekly users and rapidly growing Sora video generation app. “Our partnership with Broadcom is an important step in building the infrastructure needed to unlock the potential of AI and deliver real benefits to people and businesses,” OpenAI’s Sam Altman said yesterday.
Looking at the current price range, if you buy Broadcom AVGO stock from current levels, it could initially rise to around $374. Tactical traders who bought on the recent dip may look to lock in profits near the stock’s all-time high. According to CNN, AVGO is trading near the top of its 52-week range and above its 200-day simple moving average.
