The rally of chipmakers faltered about Broadcom

S&P 500 futures were down 0.4% today and Nasdaq 100 futures were down 1.2%. The reason is almost the only one - the quarterly report of one of the main chip manufacturers Broadcom. “Investor fears about AI threaten the record rally that kept stocks from falling during the biggest oil crisis in history,” Bloomberg writes.

Broadcom, which added $270 billion in capitalization over the last five trading sessions, fell 14% in premarket trading despite rising profits and sales. This means that all of this growth will likely be erased in one upcoming session, the WSJ writes .

The market considered that what was more important was that the forecast for revenue from AI chips was lower than analysts' forecasts - $16 billion instead of $17.2 billion. The question is also how much of the revenue will be recognized in each quarter, and not taken into account in the multi-year order book.

Why is this important?

The main thing is that Broadcom has no obvious failures: it is one of the main beneficiaries of an unprecedented boom in investments in artificial intelligence infrastructure, with a portfolio of 20 MW of computing power. It has long-term supply agreements with Google, Anthropic and Meta, and already supplies chips to OpenAI. Broadcom is also included in the “cross-financing” of the AI ​​sector - it is participating in a $36 billion deal between the Apollo Global Management and Blackstone funds to purchase chips for Anthropic.

Therefore, signs of weakness in one company raise doubts about the basis of all others. Shares of Super Micro, Micron Technology and Sandisk fell within 5% in premarket trading. We recently discussed which chip manufacturers are still worth investing in here .