Chip giant Broadcom faced a fierce market sell-off after releasing its earnings report last week. The sell-off extended into this week, with Broadcom's stock dropping another 5.6% on Monday, bringing its three-day cumulative decline to 17.7%. According to Dow Jones Market Data, this marks the company's worst three-day performance since March 18, 2020. In after-hours trading, Broadcom's stock remained slightly lower.
The sharp decline has led to significant wealth erosion for investors. In just three trading days, Broadcom's market capitalization shed over $300 billion—a loss roughly equivalent to the total market cap of its rival AMD. The rapid contraction in market value has also reshuffled the rankings of U.S. tech giants. As Broadcom's stock continued to slide, Meta regained its position above Broadcom, reclaiming its spot as the sixth-largest U.S. company by market cap. While this shift was partly due to Meta's modest stock gains, it was primarily driven by Broadcom's steep decline. For the market, such ranking changes serve as a notable signal, reflecting rapid capital reallocation and reassessment among tech giants.
Amid intensifying AI concerns, both the "OpenAI chain" and "Alphabet chain" suffered heavy blows as Broadcom's stock plummeted more than 17% in three days. The sell-off was triggered by two major blows. First, Broadcom—a core component of the "Alphabet chain"—reported earnings last week. Despite record-high sales, its AI revenue forecast fell short of Wall Street's lofty expectations. Second, Oracle, a key player in the "OpenAI chain," not only posted disappointing earnings but also faced reports that some data centers being built for OpenAI (ChatGPT's owner) might see their completion delayed from 2027 to 2028. This directly fueled market skepticism about the pace of AI infrastructure development.
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