Broadcom’s gain is Nvidia’s pain
A supply-constrained AI boom is looking for answers, and not all of those might come from the $3 trillion juggernaut.
Chip company Broadcom’s 20% gain and entrance into the trillion-dollar-market-cap club is propelling the VanEck Semiconductor ETF up about 2% on Friday.
But that rising tide isn’t lifting the boat of industry titan Nvidia, which was down over 2% as of 2:20 p.m. ET on Friday.
Right now, the AI boom still looks supply-constrained. Microsoft can’t scale up its capabilities fast enough because of a lack of data centers — even as the US has more of these than most other countries combined. And Nvidia’s saying demand for its new chip will exceed supply for the foreseeable future.
Companies are feverishly working to muscle in on Nvidia’s turf — in addition to Broadcom, the likes of Amazon and Apple are at it (the latter with help from Broadcom!) — and the more success they have, the more that AI demand might be satisfied by Nvidia’s competitors.
Zooming out... Nvidia is still far and away the best-performing chip stock this year. And with those great gains come greater expectations, which become increasingly difficult to meet.
We warned that the magnitude of Nvidia’s hot run into its latest earnings report raised the risk that gains were being pulled forward, and an underperformance versus its peers could be looming thereafter.
And... yeah that’s pretty much what’s happened:
