What’s Happening With Broadcom (AVGO) Stock?

Shares of Broadcom Inc (NASDAQ: AVGO) increased by 2.5% to $166.22 on Monday morning following the U.S. government's announcement of new sanctions aimed at China's semiconductor industry.

The Biden administration's latest export controls, marking the third round of such measures in three years, are likely to pose greater challenges for Chinese chip manufacturers. This situation could drive demand toward alternative suppliers, including Broadcom.

Key Information: Broadcom is a significant player in the global semiconductor market, focusing on designing and providing a diverse range of chips. This includes components crucial for data centers, artificial intelligence (AI) applications, and advanced wireless communication systems.

The company has established a robust position in high-bandwidth networking chips and custom semiconductors, which are essential for AI and high-performance computing. As Chinese companies confront escalating barriers to access state-of-the-art chipmaking technologies and components due to U.S. sanctions, Broadcom stands to benefit from this shift.

Additional Details: The newly imposed restrictions target 140 Chinese entities and encompass advanced chipmaking tools and memory technologies. This is expected to compel Chinese clients to seek global suppliers unaffected by the sanctions.

Headquartered in San Jose, California, Broadcom is well-positioned to take advantage of the rising demand as its diversified production capabilities and strong supply chains can meet the anticipated increase.

The sanctions also broaden the foreign direct product rule, which limits the shipment of essential technologies to Chinese enterprises, thereby impairing China's ability to develop its domestic semiconductor capabilities.

Given the expected surge in demand for AI-driven data centers and networking infrastructure, Broadcom's dominance in key chip markets could position it favorably to benefit from these geopolitical developments.

How to Invest in AVGO Stock

If you're interested in investing in Broadcom, there are several options available to you, whether it's buying shares or even shorting the stock.

Purchasing shares is generally done via a brokerage account. Many platforms offer the option to buy ‘fractional shares’, which allows you to invest in portions of stocks without needing to buy an entire share. For instance, Broadcom shares are priced at around $166.69, meaning that with a $100 investment, you could acquire approximately 0.6 shares.

If you're considering a short position against the stock, the process is a bit more complicated. You would need access to an options trading platform or a broker that permits you to short-sell stocks. This typically involves the broker lending you shares to sell, with the expectation that you will buy them back later at a lower price. If your broker allows options trading, you could also consider buying put options or selling call options at a strike price above the current trading level, allowing you to profit from declines in the stock price.

According to data from Benzinga Pro, AVGO has recorded a 52-week high of $186.42 and a 52-week low of $90.31.

Broadcom, Stock, Semiconductors