The company is already shipping its latest chip designed to speed up AI
The shares of semiconductor giant Broadcom Inc (NASDAQ:AVGO) are up 2.9% to trade at $255.89 at last glance, and earlier surged to a record peak of $257.88 after the company announced it started shipping its Tomahawk 6 chip, designed to speed up artificial intelligence (AI). The update comes ahead of the company's fiscal second-quarter report, due out after the close on Thursday, June 5.
In response, Citigroup hiked AVGO's price objective to $276 from $210. More bull notes could be on the horizon, too, as the stock's 12-month consensus target price of $243.49 is a discount to current levels.
Shares already boast a 94.1% year-over-year lead, and are trading well above all short- and long-term moving averages after an extended rally from early-April lows. The stock also jumped above recent resistance at the $240 level.
More tailwinds could be in store, should the company's quarterly results mirror that of sector peer Nvidia (NVDA). The security has a strong history of post-earnings moves, finishing five of the past eight earnings reports higher, including a 24.4% gain in December. AVGO averaged a next-day swing of 9.2%, regardless of direction, over the last two years. This time around, the options pits are pricing in a bigger move of 10%.
Options traders are already chiming in, with 121,000 calls and 81,000 puts exchanged so far today. Most popular by far is the weekly 6/6 250-strike call.
It's also worth noting Broadcom stock's
Schaeffer's Volatility Scorecard (SVS) of 82 out of 100 means it has tended to outperform options traders' volatility estimates in the past year, a boon for options buyers.