Broadcom(US:AVGO) Benzinga·2025-12-31 21:13Core Insights - Artificial intelligence has significantly impacted the business ecosystem, increasing the relevance of semiconductor companies like Broadcom Inc (NASDAQ: AVGO) [1] - Despite strong earnings performance, AVGO stock has faced a decline of approximately 10% over the past month due to concerns over AI gross margins and competition from China [2] - The current market conditions present two approaches to trading AVGO stock: a fundamental/technical analysis approach and a quantitative analysis approach [3][4] Market Performance - AVGO stock closed at $326 on December 17 before recovering to around $350, indicating volatility and investor sentiment shifts [2] - Over the past 10 weeks, AVGO stock has shown an equal number of up and down weeks, but the overall trend has been downward [7] Quantitative Analysis - Historical data analysis from January 2019 suggests that under similar market conditions (5-5-D sequence), AVGO stock could range between $334 and $386, with a peak probability density around $368 [9] - The current quant signal indicates that AVGO stock is likely to range between $330 and $420, with a peak probability density between $368 and $385 [11] Risk Geometry - The probability density of AVGO stock drops significantly between $380 and $400, decreasing by 51.46%, and plunges by 99% from $400 to $420, indicating that prices above $400 are unlikely [12] - A statistical tendency shows that after reaching around $400, AVGO stock would likely settle around $380 over the next 10 weeks [13] Trading Strategy - A recommended trading strategy is the 370/380 bull call spread expiring February 20, 2026, which involves buying the $370 call and selling the $380 call for a net debit of $330, with a maximum profit potential of $670 (203% payout) [16][17] - An alternative aggressive strategy is the 380/390 bull spread, which offers a maximum payout of nearly 285%, but the 370/380 spread aligns more closely with the data [18]