Broadcom’s AI Boom Overshadowed by Investor Jitters

Broadcom delivered quarterly results that easily surpassed Wall Street expectations, yet its stock suffered a sharp 11% decline, marking its worst trading day since January. The sell-off reflected broader unease in the artificial intelligence sector, with shares of Oracle, Nvidia, and Advanced Micro Devices also sliding.

Despite reporting a 28% revenue increase to $18.02 billion—driven by a 74% surge in AI chip sales—the company’s success was overshadowed by investor concerns about shrinking margins. Executives acknowledged that higher upfront costs, particularly in building server racks and sourcing components, would weigh on profitability in the near term.

Broadcom’s AI momentum remains undeniable. The company revealed a staggering $73 billion backlog of AI orders over the next 18 months, including $21 billion from Anthropic. CEO Hock Tan projected AI chip sales this quarter would double from a year earlier, reaching $8.2 billion. Yet he tempered expectations for OpenAI-related revenues, noting limited contributions expected in 2026.

The broader market reflected the nervous sentiment. The Nasdaq fell 1.4% and the S&P 500 slipped nearly 1%, underscoring how closely tied investor confidence has become to AI infrastructure growth. Companies most exposed to the sector—such as CoreWeave, which lost 9% on Friday—have seen valuations cut in half since midyear highs.

Analysts remain divided. Some argue the pullback is a natural correction after Broadcom’s stock soared 75–80% year-to-date, while others highlight the company’s unique position as a key supplier to hyperscalers like Google, Meta, and Anthropic. Price targets have been raised, with expectations that long-term growth will continue to be fueled by insatiable demand for compute-intensive AI services.

Oracle, meanwhile, faces deeper skepticism. Its shares have dropped more than 40% from September highs, as investors question how the company will finance its massive AI buildout amid mounting debt.

For now, “AI angst” appears to be the dominant theme across markets. Even as Broadcom’s fundamentals shine, the sector’s volatility reminds investors that the road to artificial intelligence dominance will be paved with both extraordinary growth and sharp corrections.