Broadcom (NASDAQ:AVGO) stock continued its strong bull run last week, reaching a new record high, helped by the recent strong earnings by some of the top players in the artificial intelligence industry like Dell (NASDAQ:DELL) and Marvell Technology (NASDAQ:MRVL). It has jumped by 55% from its lowest point this year.

Broadcom Stock is Expensive Ahead of Earnings

AVGO stock has been in a prolonged bull market that has brought its market capitalization to over $3.1 trillion dollars. It has soared by over 850% in the last five years and by 27% this year.

This growth happened as the company's revenues surged both organically and through its acquisitions. It acquired CA Technologies in a $18.9 billion deal, and Symantec for $10.7 billion. Its biggest buyout happened in 2021 when it paid $61 billion for VMware. 

Broadcom will publish its financial results this week, providing more color about its business. These numbers come at a time when its valuation multiples have remained at an elevated level. 

AVGO stock trades at a forward price-to-earnings ratio of 51, higher than the sector average of 34. This multiple is higher than the five-year average of 47. It is also higher than that of its peers. For example, NVIDIA (NASDAQ:NVDA) has a forward multiple of 23, while Micron (NASDAQ:MU) has 11. 

Broadcom's expensive valuation is because of its growing AI business thanks to its large partnerships with companies like OpenAI, Alphabet (NASDAQ:GOOG), and Anthropic. Its most recent results showed that its AI revenue jumped by 106% to $8.4 billion.

Broadcom's revenue jumped by 29% to $19.3 billion in Q1'26, with its net earnings rising by 34% to $7.34 billion. Wall Street analysts predict that its upcoming earnings will show that its revenue jumped by 47% in Q2 to $22 billion. 

They predict that its annual revenue will soar by 63% this year to $103 billion, followed by $160 billion next year. Broadcom has a long history of beating analysts estimates. 

AVGO Stock Has Formed a Bullish Pattern Ahead of Earnings

Technicals suggest that the stock may be on the cusp of a strong bullish breakout ahead of earnings. The most positive catalyst is that it has formed a bullish flag pattern, which is made up of a vertical line and a horizontal channel. It has already moved above the upper side of this channel. 

AVGO stock price chart | Source: TradingView

Broadcom stock has remained above all moving averages and the important resistance level at $414, its highest point in December last year. Therefore, the stock will likely reciprocate the recent Marvell and Dell stock surges after earnings. If this happens, it may hit the crucial resistance at $500, slightly higher than the consensus estimates.

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