News and analysis

Ethereum (ETH) has declined by 2.5% this week to $3,896, mirroring broader crypto market trends where Bitcoin (BTC) remains stable at $100,400. Earlier this week, ETH experienced a sharp 12.7% drop to $3,484, triggered by the announcement of Alphabet's new quantum chip, Willow. While the direct impact of this news on Ethereum is limited, it exposed the vulnerability of the crypto market, which appears to be losing momentum following its recent rally.

Investors showed willingness to sustain an upward trajectory at $3,600, leading to a rebound from this level. However, the recovery stalled near the $4,000 resistance, which remains a formidable barrier for ETH. The inability to break above this level indicates weakening bullish momentum. A pullback toward $3,500 has already begun and is likely to persist, reflecting the fading appetite for significant upside in the current market environment.

Broadcom (AVGO) is going to release its quarterly earnings today after the closing bell. In the meantime, I suppose its product offering in the market is as strong as it has ever been. Its capitalization is well progressing on the road towards $1 trillion, achieving interim goals around $835 billion now when its share price is pressed closer to all-time highs once again. Thus, I feel reasonable just to hold my existing bullish positions in Broadcom, regardless of a direct market response to this particular earnings report, and maybe even add more shares of Broadcom to my personal portfolio in case of any noticeable retracement or simply enjoy the further growth in case of a stronger bullish momentum in after-hours trading.

For me, it is not at all a question of whether the record sales (widely expected above $14 billion) will exceed previous sales (at $13.07 billion in Q2) by another billion dollars or so. If this doesn’t happen right now, it will happen later anyway, as more important positive signals are coming. For me, and I think for many in the Wall Street crowd, a greater call came when Apple suddenly said a day before that it was collaborating with Broadcom on developing Apple's first server chip tailored for artificial intelligence. Following the news, Broadcom shares jumped by more than 5% on December 11, even though the stock stepped about 3% back the next day due to the natural wave of profit-taking before earnings. According to sources familiar with the matter, Reuters said, the chip is internally code-named "Baltra", and it would be ready for mass production by 2026. A cooperative work will further cement Apple's efforts to expand into the field of AI-driven hardware. Broadcom typically sells its production directly to customers rather than licensing it as an intellectual property, but now it reportedly decided to provide Apple with a more limited range of design services while still supplying its networking technology.

Broadcom's chips and digital connectivity solutions serve to develop advanced algorithms for AI data centers, with the company being a real leader in its niche, especially after one of its former rivals VMware became a part of Broadcom in November 2023. Some business-critical technologies of flagship corporations like Apple, Samsung, Huawei or Cisco are now nearly impossible to imagine without delivery of components and close cooperation with Broadcom. For nearly two decades, as an example, Broadcom-originated chips used for Bluetooth, Wi-Fi and global navigation have been indispensable for the Samsung Galaxy series of devices. Broadcom sales to Samsung represent more than 20% of the overall Broadcom sales, while its sales to Apple were about 13.3% until recently. Now Apple's share of Broadcom's shipments, and therefore Broadcom's profits, will obviously increase, which will further strengthen the fundamental basis for the almost 3-fold increase in AVGO share price over the past 18 months.

Chiliz (CHZ) has declined by 9.2% this week to $0.1187, significantly underperforming the broader crypto market, where Bitcoin (BTC) remains steady at $100,048. Earlier in the week, CHZ plunged by 30.0% to a low of $0.0906 before recovering partially, supported by a broader market rebound. Despite this recovery, the outlook for CHZ remains bearish, as the token shows limited independent momentum and remains heavily reliant on overall market dynamics.

Breaking through the resistance at $0.1250 seems unlikely given the current conditions. With no substantial catalysts to drive further growth, CHZ is expected to face continued selling pressure, potentially sliding back toward $0.1000 in the near term.

Less than two months ago, I mentioned Apple as probably the next record-breaking tech giant in terms of its market value. The early execution of the forecast has been delivered already in the last trading session of November, and the upside move here is still going on, reportedly due to slowly growing demand on AI-integrated features in latest iPhone line-ups. While Apple share price is approaching a meaningful landmark of $250, my other prediction related to Google's further strength is just preparing to become true as well. I have repeatedly highlighted Google as a still clearly underestimated company, and now the Wall Street crowd started to fix this bug. At least, Google came into the spotlight once again, so that its share price added more than 5.5% on Tuesday and nearly 1% more on Wednesday's pre-market after a public demonstration of its actual breakthrough in quantum computing technology.

Google-designed new generation chip, called Willow and based on numerous quantum bits where each of them are conveyed to one of the two atomic states instead of normally used semiconductor properties, successfully solved a multi-task computing problem after spending in five minutes even though this would take more time (nearly 10 septillion years) than the history of the whole universe for a classical computer. Many tech corporations are attempting to build quantum systems to eventually perform at much faster speeds than silicon-based computers, yet all of them turned out to be strongly error-prone, which made such kinds of systems rather unstable and, therefore, unreliable. The more qubits (elementary quantum units) are used, the more errors typically occur, but Google pretended on superiority by saying it found a way to string together qubits in the way that allows error rates to exponentially decline as the number of qubits is rising, with an additional ability of correcting errors in a real time working process.

Of course, the ultimate goal is to make quantum computing commercially viable, which is still not achieved now, but Google CEO Sundar Pichai shared a vision that an important step was done in a journey to practical applications like more effective drug discovery, fusion energy or more powerful battery design. Anyway, a nearly three decades long challenge now has a proper answer, with a telling reaction even from Tesla and SpaceX founder Elon Musk, who expressed his emotions with a single word "wow" at social media platform X, formerly Twitter.

Google parent Alphabet has updated a maximum since July, marching ahead within less than $5 per share from refreshing its historical highs. The stock soared more than 30% so far year-to-date, yet the Wall Street's analyst pool target area was around $210 on average before the news, which meant around 13% of free space upside, and it supposedly will be raised soon. The whole thing is of course not a matter of just an important scientific breakthrough but mostly with rapidly improving performance of Google in its cloud and search engine business, which is generating growing numbers of ad-based inflows together with billions of YouTube views.

I will not repeat particular numbers of sales and quarterly profits, but all I want to say now is that my personal projections for profits from holding Google shares became higher, based on refreshing all-time highs first (I bet it will be done before the end of 2024), with further targeting above $225 (before mid-summer or maybe in early spring of 2025 already, depending on current quarter's earnings results in early February.