Shares in Broadcom (AVGO) stock are back down in price after surging as the semiconductor announced a new deal with OpenAI. Broadcom shares jumped nearly 10% on Monday after the company confirmed a major partnership with OpenAI to develop custom AI chips. However, the stock has since corrected back down to $349.
AVGO stock buying picked up steam yesterday on the highest trading volume in over a month. The move coincided with AVGO’s RSI reclaiming the 50 threshold to signal a return of bullish price momentum. At press time, Broadcom’s stock is up 50% YTD, one of its best single-year performances ever. The stock of Broadcom increased sharply because analysts started to consider the possible income of this multi-year agreement. In the case of AVGO, this collaboration can help the company increase its dominance in the AI semiconductor market because the need in tailor-made silicon solutions is increasing in all technical fields.
OpenAI and Broadcom signed an agreement to build up to 10 gigawatts of AI accelerators, a massive amount of power that will consume as much electricity as a large city. This partnership marks another strategic move by OpenAI as it expands its infrastructure to support ChatGPT’s 800 million weekly users and its rapidly growing Sora video generation app. “Partnering with Broadcom is a critical step in building the infrastructure needed to unlock AI’s potential and deliver real benefits for people and businesses,” OpenAI’s Sam Altman said yesterday.
Looking at current price points, buying Broadcom AVGO shares from current levels could initially see a move up to around $374. Tactical traders who have bought the recent pullback may look to lock in profits in this location near the stock’s record high. Per CNN, AVGO is trading near the top of its 52-week range and above its 200-day simple moving average.