- Leading chip stocks fell on Thursday as investors exited the semiconductor space.
- The fall was due to chip designer Broadcom’s earnings report, which failed to meet expectations.
- Broadcom’s market value fell by $300 billion after the report.
Chip stocks slid on Thursday, with chipmakers Marvell Technology, Broadcom, and Micron Technology leading the losses.
The rout was caused by investors fleeing the semiconductor space after a disappointing outlook from custom AI chip designer Broadcom.
The California-based company's stock fell over 15% after Broadcom's earnings report on Wednesday failed to meet expectations. The chipmaker also declined to raise its forecast on AI semiconductor sales for the year.
Broadcom's fall also had an impact on other stocks, CNBC reported. Micron Technology declined over 6%. Marvell Technologies also slipped 5%.
Intel and Qualcomm sank 2% while AMD slid 5%. Nasdaq also fell 200 points in early trading.
The decline is significant as semiconductor firms have led the broader stock market to all-time highs in recent weeks, with many big companies posting huge gains.
Last month, Micron surpassed a market capitalisation of $1 trillion for the first time.
Earlier this week, shares of Marvell jumped almost 40% after Nvidia CEO Jensen Huang claimed the AI accelerator designer could be the "next trillion-dollar company”.
What Happened To Broadcom?
Shares of the chip designer had been hitting multiple all-time highs over the past five sessions, as investors priced in solid results.
But things changed after Broadcom's earnings report. The chip designer reported revenue of $22.19 billion, which was slightly over expectations of $22.13 billion, but failed to impress some investors.
Earnings per share were $2.44, modestly exceeding estimates of $2.39.
In the second quarter, semiconductor revenue from AI rose 143% year over year. But, Broadcom projected AI chip sales for the third quarter at $16 billion, much below estimates of $17.2 billion.
Broadcom counts Google, Meta and OpenAI among its clients. The company is expected to gain from hyperscaler spending on AI this year, as per Yahoo! Finance.
"We expect this momentum to continue into fiscal year 2027 and reiterate our AI semiconductor revenue guidance to be in excess of $100 billion," CEO Hock Tan said during the company's earnings call.
However, Wall Street was expecting much more. Hours after the earnings call, shares fell and Broadcom lost over $300 billion in market value.
The results affected Asian markets as well, which experienced a sell-off in technology and semiconductor stocks.
The MSCI index for Asian shares slipped 1.6%, ending a four-day rally that had resulted in an all-time high.
South Korea's KOSPI, seen as a gauge for global AI investment sentiment due to the prominence of its chip industry, slid 1.8%.
