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Strength Seen in Broadcom Inc. (AVGO): Can Its 7.3% Jump Turn into More Strength?

Broadcom Inc. AVGO shares ended the last trading session 7.3% higher at $728.80. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 10.3% gain over the past four weeks.

Broadcom is benefiting from strong networking and server storage growth. It witnessed strong growth from the deployment of Tomahawk 4 for data center switching at hyperscale customers.

This chipmaker is expected to post quarterly earnings of $10.13 per share in its upcoming report, which represents a year-over-year change of +11.7%. Revenues are expected to be $8.71 billion, up 7.5% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Broadcom Inc., the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on AVGO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Broadcom Inc. belongs to the Zacks Electronics - Semiconductors industry. Another stock from the same industry, Ambarella (AMBA), closed the last trading session 2.9% higher at $71.78. Over the past month, AMBA has returned 8%.

For Ambarella , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.20. This represents a change of -145.5% from what the company reported a year ago. Ambarella currently has a Zacks Rank of #3 (Hold).

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