Chip Stocks Hit a Wall as Broadcom AI Guidance Disappoints
Broadcom shed more than $300B in market value Thursday, dragging semiconductor stocks lower while the broader market climbed. Its AI chip revenue guidance fell short of Wall Street's expectations.
The company projected third-quarter AI chip sales of $16B, below analyst estimates of $17.2B, sending shares down 14% and rippling across the entire semiconductor sector.
ARM Holdings fell 6%, Advanced Micro Devices and Qualcomm also sank, per CNBC.
"These stocks have all had very strong runs," said John Vinh, equity research analyst at KeyBanc Capital Markets, per CNBC.
Vinh noted that repeated upward revisions, particularly on AI, had pushed expectations to a level Broadcom could no longer clear.
"We've come a long way. Fundamentals are solid," said Keith Lerner, CIO at Truist Wealth, per CNBC.
The Dow Jones Industrial Average climbed Thursday, hitting an all-time high, per Reuters.
Nine out of 11 S&P 500 sectors closed in the green, per Reuters. Investors rotated out of tech into healthcare and financials.
UnitedHealth jumped 5.7% after Bank of America upgraded the stock to "buy," leading healthcare's 3.1% sector gain.
CrowdStrike added to the bearish tech tone, falling 8.5% after reporting a rise in first-quarter operating expenses.
The split outcome signals money isn't leaving the market — it's moving within it.
SpaceX IPO Adds Pressure
SpaceX launched its investor roadshow Thursday ahead of a June 12 market debut, targeting a $75B raise at a $1.75T valuation.
David Morrison, senior market analyst at Trade Nation, said the listing is "sure to suck some money out of outperforming stocks," per The Guardian.
That capital reallocation could extend the chip sector's rough patch beyond a single earnings miss.
Blackstone separately restricted withdrawals from its flagship private credit fund after redemption requests hit $4.5B in the second quarter.
Bob Savage, head of markets macro strategy at BNY, said Broadcom's weaker guidance raised questions about sustainability of valuations and leadership within the AI theme.
Whether Thursday marks the beginning of a broader tech correction or a brief detour depends on what the next round of AI spending data shows.
