Broadcom’s underwhelming results are dragging the AI complex and the wider market lower
The company didn’t raise its AI goal post for next year, despite an $80 billion equity raise from one of its biggest customers.
Not a sentence we’ve been used to writing these last few weeks: artificial intelligence stocks are down, dragging major indexes down with them, as Broadcom failed to move up its goalpost for AI chip revenue.
The semiconductor company reported earnings results and gave full-year guidance that were just a smidge above Wall Street expectations. Perhaps more concerning to investors: on a call with analysts, CEO Hock Tan said the company is keeping its AI semiconductor revenue guidance for its fiscal 2027 at “in excess of $100 billion.”
That seems to have have disappointed investors, with the stock off more than 15% in early trading. However, it’s worth noting that Broadcom came into the print absolutely red-hot; the stock popped earlier this week after one of its biggest customers, Alphabet, announced a more than $80 billion equity raise. Sitting at around $406 in early trading puts it back to where it was about a month ago, so it’s not exactly a huge derailment.
Nevertheless, the wider AI complex is under some pressure this morning. CrowdStrike — which also came into earnings on a tear — has been given the same treatment by traders overnight, despite beating estimates and boosting its guidance.
Elsewhere, Micron and Sandisk, which last week got Wall Street-high price targets from Susquehanna, fell as well, as did AMD, Arm Holdings, and Qualcomm. Marvell Technology, a fellow chipmaker that recently soared after Nvidia CEO Jensen Huang called it the next “trillion-dollar company,” also gave back some of its latest gains.
And of course, when you arrived at a record six consecutive closes by way of AI-powered gains, it stands to reason that when AI falters, the wider market does too. Futures for the tech-heavy Nasdaq Composite have fallen by 1.18% and the S&P 500 has fallen by 0.05% as of 10 a.m. ET.
