Broadcom Inc. (NASDAQ: AVGO) stands at the confluence of opportunity and uncertainty as the artificial intelligence (AI) industry's growth accelerates—particularly within the infrastructure segment. The company's stock has enjoyed strong performance over the past year, boosted by expanding AI adoption, yet investor sentiment is tempered by concerns about its valuation levels.
Over the course of the last 52 weeks, AVGO's shares have gained upwards of 35%, buoyed by AI’s transition from an emerging novelty to an essential innovation embedded across diverse applications. The stock notably surpassed the $400 threshold during its peak, signaling strong technical momentum indicative of broad market optimism regarding Broadcom’s role in the chipmaking sector.
Beyond price action, Broadcom’s operational results also demonstrate a notable degree of consistency. Since March 2021, the company has missed consensus sales projections only twice and has consistently met or exceeded earnings per share expectations throughout that period. Such performance underscores the company’s ability to deliver steady results amid a fluctuating semiconductor landscape.
Despite these strengths, Broadcom has encountered some headwinds early in 2026, with its stock declining approximately 6% since January. Nevertheless, analyst confidence remains strong. Joshua Buchalter, an analyst at TD Cowen, recently reiterated a Buy rating and projected a target price of $450, citing expected growth in semiconductor demand aligned with accelerating AI adoption.
Additional analysts echo the view that the AI cycle could extend further, potentially mitigating some historical volatility commonly associated with semiconductor stocks. This outlook supports continued interest in Broadcom as a play on AI infrastructure expansion.
However, valuation metrics temper unreserved enthusiasm. Currently, AVGO trades near 70 times trailing twelve months earnings—a premium level that, although reduced relative to recent quarters, still provokes caution. This elevated multiple heightens sensitivity to shifts in investor confidence, which could prompt quick price adjustments if skepticism intensifies.
Market sentiment is further illuminated within the options arena. Volatility skew—a measure analyzing implied volatility across different strike prices for options expiring simultaneously—reveals increased trading activity in put options priced below the current stock level. This pattern indicates that market participants are acquiring downside protection, reflecting acknowledgement of possible near-term corrections even amid prevailing bullish perspectives.
For traders seeking to engage with these competing narratives, Direxion offers two exchange-traded funds tied explicitly to Broadcom’s share performance. The Direxion Daily AVGO Bull 2X Shares (NASDAQ: AVL) aims to deliver twice the daily returns of AVGO stock, catering to those optimistic about Broadcom's trajectory. Conversely, the Direxion Daily AVGO Bear 1X Shares (NASDAQ: AVS) seeks to provide inverse daily performance, allowing bearish investors to capitalize on anticipated downward moves.
These ETFs provide an alternative to more complex options strategies, making leveraged and inverse exposure more accessible to retail investors. Unlike derivatives, which often require advanced knowledge and can encompass intricate risk profiles, Direxion's products function similarly to typical stocks, facilitating ease of entry and exit for speculators and traders. Nevertheless, participants must be cognizant of unique risks associated with these funds, including amplified volatility relative to traditional index funds and the phenomenon of value erosion over time due to daily compounding effects—particularly when held beyond a single trading session.
Examining current price trends for AVL reveals challenges in regaining upward momentum. Since December, the ETF has declined approximately 13%, facing resistance at its 50-day moving average, which has hindered rallies on daily charts. At a weekly level, the 20-day exponential moving average similarly restricts gains, though the 50-day moving average provides some support to stabilize prices.
In contrast, AVS exhibits a different momentum profile, having gained nearly 6% since early January. The ETF successfully broke through key moving averages—the 20-day EMA and 50-day moving average—on daily charts in December, now using these levels as support. However, resistance at the weekly 20-day EMA represents an ongoing obstacle for bearish momentum.
These divergent ETF performances exemplify the active debate enveloping Broadcom’s near-term prospects, with investors weighing AI-driven growth potential against an environment of elevated valuations and wary market sentiment.