Broadcom Joins Nvidia, Tesla in Top Stock Options as Market Cap Hits $1 Trillion

Broadcom's shares jumped more than 20% to trade at $218.04 after the supplier of semiconductors, enterprise software and security solutions provided investors a rosy outlook, buoyed by increasing demand from artificial intelligence applications. Friday's rally added almost $177 billion to its market value, taking it to $1.02 trillion.

The company reported adjusted earnings of $1.42 in the fiscal quarter that ended Nov. 3, up 31 cents from a year earlier. That beat the average analyst estimate by about 1.9%. While revenue rose 51% to $14.054 billion, it slightly missed consensus by 0.2%. But what impressed the market was the company's outlook for the AI revenue serviceable addressable market (SEM) for XPUs, the class of processors designed to handle specific types of workloads more efficiently than traditional central processing units (CPUs) and network.

"The star of the show was its massive serviceable addressable market (SAM) target of $60-$90 billion by fiscal 2027 for AI sales across three top hyperscale customers (two new customers add upside, we think)," Oscar Hernandez Tejada, an analyst at Bloomberg Intelligence said in a note Friday. "Our share assumptions applied to the updated SAM suggest significant upside to current consensus figures for AI revenue."

Call options giving the holders the right to buy Broadcom shares at $220 attracted the heaviest volume after the share price rally pushed the contract in-the-money before expiration today. More than 69,300 of those contracts were traded with more than 1 hour still left in the trading day. That's more than 24 times the open interest.

Fund inflows into the stock outpaced outflows by $752.5 million, adding to the sixth monthly net inflows into Broadcom. The biggest money came from small orders, exchange data show.

Amid the rally, technical indicators tracked by moomoo are starting to flag warning signs. The stock's surge sent the price above the upper line of the Bollinger band, a sign to some who study charts that the security is overbought, and the trend may soon turn lower. Ten of the remaining 14 technical indicators on the moomoo app tend to agree.

Share your thoughts on Broadcom's prospects in the comments section. Do you think the rally has room to run, or do you agree with the technical indicators which signal the trend could reverse? Let your voice be heard by voting below.