What Happened?
A number of stocks fell in the afternoon session after the semiconductor sector tumbled as a 'buy the rumor, sell the news' event unfolded around AI-chip leader Nvidia, despite its strong earnings report.
Even though Nvidia reported better-than-expected fiscal fourth-quarter results and provided upbeat guidance, its shares fell, dragging the broader market with it. The sell-off triggered a plunge in the Philadelphia Semiconductor Index and pulled down peers like Broadcom, Micron, and AMD. Analysts suggest the focus for investors has shifted from Nvidia's stellar performance to broader concerns, including growing competition in the artificial intelligence sector and whether the high levels of investment in the AI space are sustainable. This negative reaction highlights a cautious sentiment, where even positive news couldn't sustain the sector's upward momentum.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Semiconductor Manufacturing company Applied Materials (NASDAQ: AMAT) fell 4.9%. Is now the time to buy Applied Materials? Access our full analysis report here, it’s free.
- Processors and Graphics Chips company Broadcom (NASDAQ: AVGO) fell 5.2%. Is now the time to buy Broadcom? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Lam Research (NASDAQ: LRCX) fell 5.2%. Is now the time to buy Lam Research? Access our full analysis report here, it’s free.
- Memory Semiconductors company Western Digital (NASDAQ: WDC) fell 4.2%. Is now the time to buy Western Digital? Access our full analysis report here, it’s free.
- Processors and Graphics Chips company Allegro MicroSystems (NASDAQ: ALGM) fell 4.3%. Is now the time to buy Allegro MicroSystems? Access our full analysis report here, it’s free.
Zooming In On Broadcom (AVGO)
Broadcom’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 20 days ago when the stock gained 7.6% on the news that Wall Street digested the significant revenue potential from recent AI capital expenditure plans announced by key customer Google. Google announced plans to spend between $175 billion and $185 billion on AI infrastructure in 2026, marking one of history's largest AI buildouts. Broadcom had secured $21 billion in orders from Google for its custom TPU AI accelerators. Broadcom itself had guided for its own AI revenue to reach $8.2 billion in the first quarter of 2026, which represented 100% growth from the previous year. In response to the developments, Wolfe Research upgraded the stock to Outperform, highlighting increased confidence in Google's program and Broadcom's role as a key supplier. Jefferies also reiterated its Buy rating, citing the company's strong position in AI and networking markets.
Broadcom is down 9% since the beginning of the year, and at $316.43 per share, it is trading 23.4% below its 52-week high of $412.97 from December 2025. Investors who bought $1,000 worth of Broadcom’s shares 5 years ago would now be looking at an investment worth $6,734.
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