AVGO Stock Threatens to Fall Under $300 as Nvidia Inference Expansion Weighs
When Nvidia Corporation's earnings failed to spark the larger AI surge, Broadcom Inc. shares plummeted precipitously, underscoring investor
Quick overview
- Broadcom shares fell approximately 6% following Nvidia's earnings report, reflecting investor caution in the semiconductor sector.
- Despite Nvidia's strong performance, concerns about high valuations and competitive pressures have led to a reassessment of AI-related stocks.
- Broadcom's integration of VMware and its focus on higher-value contracts have introduced short-term uncertainties regarding revenue visibility.
- While Broadcom remains fundamentally strong, the market is shifting towards a more disciplined approach to valuations amid ongoing volatility.
When Nvidia Corporation’s earnings failed to spark the larger AI surge, Broadcom Inc. shares plummeted precipitously, underscoring investor apprehension about large-cap chipmakers.
Broadcom Slides as AI Sentiment Softens
Broadcom shares declined around 6%, slipping below the $310 level, as the semiconductor sector reacted negatively to Nvidia’s latest earnings release. Although Nvidia delivered results that exceeded expectations, the broader market response was muted, with AI-related stocks drifting lower rather than extending gains.
According to market commentary, investors remain wary of elevated valuations across the chip sector. Even strong results from Nvidia were not enough to dispel concerns that enthusiasm surrounding AI infrastructure may have run ahead of near-term earnings visibility.
Early-Year Volatility and Short-Term Rebound
Broadcom began the year under pressure, briefly falling below $300 amid a broader reassessment of technology valuations. Investors questioned whether AI-driven optimism had inflated semiconductor pricing multiples beyond what near-term earnings growth could justify.
A subsequent rebound followed renewed clarity around hyperscaler spending, helping Broadcom recover part of its earlier losses. However, volatility has persisted as the market recalibrates expectations around AI monetization timelines and competitive positioning.
Nvidia’s Dominance Casts a Competitive Shadow
Nvidia once again reported a powerful “beat and raise” quarter, fueled by demand for its Blackwell and Rubin GPU architectures. Yet in a highly competitive semiconductor landscape, Nvidia’s strength has increasingly highlighted competitive pressures on peers.
During its earnings call, CEO Jensen Huang emphasized accelerating growth in AI inference—the stage where trained models are deployed into real-world applications. This segment was previously viewed as an opportunity for competitors such as AMD and Broadcom to expand market share.
However, Nvidia’s continued expansion into inference, supported by deeply integrated software ecosystems, suggests that switching costs may remain high. This dynamic has prompted investors to reassess how quickly rivals can capture incremental share in AI acceleration and networking markets.
Technical Analysis – The Lower Highs Continue
Broadcom entered the new year on uncertain footing, with its share price sliding as confidence across the AI semiconductor complex began to fray. After months of near-uninterrupted gains, investors have turned more defensive, questioning how much of the AI opportunity is already priced into leading infrastructure names.
AVGO Chart Daily – The 100 SMA Is Under Attack
The bearish momentum continues and AVGO shares fell sharply on Thursday, threatening to break the 100-day simple moving average (red) which has acted as support before but we’re seeing a retest again. A break below the 100 SMA would deepen the correction toward lower support zones near $250.
Hyperscaler Spending Provides Partial Support
Recent commentary from major cloud providers offered some reassurance. Companies including Amazon and Alphabet signaled significant increases in capital expenditure, reinforcing expectations that AI data-center expansion remains in an early growth phase.
Broadcom, with exposure to networking chips, switching solutions, and custom accelerators used in hyperscale environments, initially benefited from this outlook. The stock gained approximately 11% over two sessions during that rebound phase.
Still, hyperscaler investment strength has not fully offset valuation concerns and competitive uncertainty.
VMware Strategy Adds Complexity
Another area drawing scrutiny is Broadcom’s integration of VMware following its acquisition. Management has repositioned the business toward higher-value, longer-term enterprise contracts, opting not to renew certain agreements with smaller cloud partners.
While the strategy aims to enhance profitability and streamline operations, it has introduced short-term uncertainty regarding renewal cycles and recurring revenue visibility. Because VMware was expected to add stable software revenue to complement Broadcom’s cyclical semiconductor business, any perception of friction can weigh on sentiment.
Margins and Valuation in Focus
Broadcom continues to post strong financial performance, including robust revenue growth and solid free cash flow. However, guidance indicating modest gross-margin pressure—partly tied to the scaling of AI-related products—has tempered enthusiasm.
In the current macro environment, investors are prioritizing sustainability and capital efficiency. With geopolitical risks and interest-rate uncertainty still present, the premium previously assigned to AI-exposed stocks is being reassessed.
Outlook: Broadcom remains fundamentally strong and strategically positioned within AI infrastructure. Yet the market appears to be transitioning from unbridled optimism to a more demanding phase, where valuation discipline and competitive durability matter more than headline growth alone. Until clearer evidence emerges that AI expansion can translate into sustained margin stability and predictable returns, volatility in semiconductor leaders such as Broadcom may persist.
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