Broadcom Secures Cloud and AI Partners as Share Price Nears Key Technical Floor

Broadcom has strengthened both its enterprise cloud and artificial intelligence credentials in recent weeks, yet the stock continues to slide. The company won a major VMware Cloud Foundation deal with the world’s largest building society and jointly developed a new AI chip with OpenAI — but market disappointment over guidance has sent shares into a technical correction.

The Nationwide Building Society, based in the UK, is expanding its partnership with Broadcom as part of a hybrid-cloud modernisation push. The lender, which recently acquired Virgin Money for £2.9 billion, plans to use VMware Cloud Foundation (VCF) as the central platform for integrating the two IT environments. The private-cloud infrastructure is designed to be scalable enough for AI workloads while meeting the security demands of banking data. For Broadcom, the deal serves as a tangible validation of its VMware acquisition strategy, which had drawn scepticism over the long-term viability of its software business.

On the AI front, Broadcom and OpenAI unveiled their first jointly developed chip, codenamed Jalapeño, which is expected to enter data centres by the end of 2026. Engineering teams moved from initial design to production readiness in just nine months — a record for high-performance semiconductors — using OpenAI’s own AI models during development. Lab tests are already under way, with the chip promising significantly better energy efficiency than current flagship designs. CEO Hock Tan described demand as “insatiable,” and Broadcom, together with Microsoft and other partners, is planning massive capacity expansion. The contract includes 10 gigawatts of new computing power by 2029.

Should investors sell immediately? Or is it worth buying Broadcom?

Despite these milestones, the stock has fallen roughly 10.6% over the past seven trading sessions, closing at €321.05 on Friday. That puts the shares nearly 25% below the all-time high of €429.60, set only in early June. The catalyst was a profit-taking wave after Broadcom reported second-quarter fiscal 2026 AI semiconductor revenue of $10.8 billion, a 143% year-on-year jump, but issued guidance that disappointed investors. Some market participants are now worried about margin pressure. The relative strength index sits at 40.5, approaching oversold territory, and the 200-day moving average near €310.50 represents a critical support level. That zone has held during previous consolidation phases, and a successful defence could pave the way for stabilisation in the coming week.

Wall Street analysts remain broadly bullish. Of 42 covering the stock, 34 rate it a strong buy, with an average price target of $516.59. JPMorgan sets a target of $580, Oppenheimer $535, and UBS $485. The management has guided for over $100 billion in cumulative AI revenue, though some investors fear that scaling up custom silicon and data-centre infrastructure will compress margins.

Shareholders can expect a near-term payout: Broadcom will pay its quarterly dividend of $0.65 per share on Tuesday, with the record date already past. The company has also launched a multibillion-dollar buyback programme, marking the 15th consecutive year of dividend increases. The next major catalyst on the calendar is the third-quarter earnings release on September 3, when investors will get updated figures on both the cloud and AI pipelines. For now, the €310.50 level is the line in the sand — a failed test could trigger a deeper sell-off, while a bounce would restore some confidence in a stock caught between extraordinary fundamental progress and short-term market sentiment.