Broadcom Inc. (NASDAQ: AVGO) was trading near $363 on Friday, with modest premarket gains, but remained well below its $495 yearly peak. The increase appeared tied to broader market momentum rather than a company-specific catalyst.

The main issue surrounding the company is growing regulatory scrutiny in Europe. European Union authorities are surveying cloud service providers across the region about their dependence on VMware and the challenges involved in migrating to competing platforms. Officials are also examining Broadcom’s partner-certification requirements and whether those rules could restrict competition among cloud providers.

A key deadline is approaching on March 31. Under Broadcom’s restructured partnership framework, certain service providers could lose the ability to resell VMware subscriptions after that date. If regulatory concerns continue, the EU could open formal antitrust proceedings or impose interim protective measures.

Broadcom significantly changed VMware’s licensing structure after completing its $61 billion acquisition of the company in 2023. Cloud providers across Europe have since objected to changes in contractual terms and rising costs. EU antitrust penalties can reach as much as 10% of a company’s total worldwide annual revenue, creating potentially significant financial exposure for a company of Broadcom’s size. The March 31 deadline therefore provides a near-term point for monitoring how the partnership changes affect service providers and whether European authorities take further action.

Analysts Maintain Positive Ratings

The regulatory uncertainty has not substantially weakened Wall Street’s positive view of Broadcom. Piper Sandler upgraded AVGO to “strong buy” on Wednesday and set a $460 price target. Oppenheimer maintained its “outperform” rating with a $535 target, while BMO Capital Markets raised its target to $575. KeyCorp kept its “overweight” rating and also assigned a $575 target.

The average analyst consensus target is approximately $505.97, well above the stock’s current trading level. Of the 34 analysts tracked by MarketBeat, 29 recommend Buy, one recommends Strong Buy, and four rate the stock Hold. DA Davidson is the exception, maintaining a Neutral rating with a $350 price objective.

Broadcom opened Wednesday at $360.83, below both its 50-day simple moving average of $383 and its 200-day simple moving average of $378. The moving average convergence divergence (MACD) indicator remained below its signal line. Resistance was identified near $376.50, while support was near $358.

AI Revenue Supports Growth Case

Broadcom reported approximately $16.7 billion in AI semiconductor revenue in its most recent quarter, described in the source as a record level. Management forecasts indicate that the AI business could generate roughly $115 billion in fiscal 2027 and $230 billion in fiscal 2028.

Demand for customized AI accelerator chips and networking solutions remains strong among hyperscale cloud operators. OpenAI recently selected Broadcom to develop its first custom AI processor, giving the company a more prominent role in AI infrastructure supply networks.

Third-quarter earnings per share were $3.32, exceeding the $3.22 consensus estimate. Revenue reached $29.59 billion, above the $29.24 billion forecast and up 85.5% from the same period a year earlier.

However, the company’s forward revenue guidance fell short of Wall Street expectations, leading Truist to lower its price target. Broadcom insiders sold approximately 61,644 shares worth nearly $24 million during the previous three months. Institutional investors held 76.43% of the company’s outstanding shares, while analyst consensus projected full-fiscal-year earnings per share of $10.36.

Source: Blockonomi