Broadcom selloff drags Nasdaq 100 lower as chip stocks slide 13%

Broadcom's revenue miss and unchanged long-term AI forecast triggered a semiconductor-led selloff that pushed Nasdaq 100 futures lower and deepened the rotation out of technology stocks.

Nasdaq 100 futures fell as much as 1.2% after Broadcom's $22.19 billion in quarterly revenue missed estimates, sparking a broad chip sector decline.

"The market demanded perfection from Broadcom, and anything short of a raise was going to get punished," said Ryan Lee, senior vice president of product and strategy at Direxion.

Broadcom shares slid more than 13% in extended trading after the company reported second-quarter revenue of $22.19 billion, below the $22.27 billion consensus compiled by LSEG. Adjusted earnings of $2.44 a share beat the $2.40 estimate, and AI semiconductor revenue surged 143% to $10.8 billion. But Chief Executive Officer Hock Tan left unchanged the company's $100 billion AI revenue target for fiscal 2027, disappointing investors who had expected an upgrade after Broadcom booked more than $30 billion in AI semiconductor orders during the quarter.

The selloff threatens to deepen the June rotation out of mega-cap technology stocks into defensive sectors, with S&P 500 futures also declining as traders recalibrated expectations for AI-related hardware spending. The decline in Broadcom, which had rallied more than 80% over the past year and hit an all-time high of $495 during Wednesday's regular session, dragged the broader semiconductor complex lower. The stock closed the regular session at $479.23, down 0.5%, before sliding more than 13% in extended trading.

Broadcom's guidance for the current quarter offered some support: the company forecast total revenue of about $29.4 billion, above the $28.54 billion consensus, with AI semiconductor revenue expected to grow more than 200% year over year to $16 billion. However, some analysts had modeled AI revenue closer to $17 billion, explaining the after-hours weakness.

The company also announced a financing partnership with Apollo and Blackstone to create an AI special purpose vehicle that will provide debt financing to facilitate chip sales to customers including Anthropic and OpenAI. Broadcom has purchase orders totaling $6 billion from two unnamed customers, with shipments expected to begin in late 2026.

The selloff comes as Big Tech companies are expected to spend more than $700 billion on AI infrastructure this year, up from about $400 billion in 2025, according to Reuters. Rival Marvell Technology said last month its custom chip business would surpass $10 billion in revenue by 2029, intensifying competition in the market Broadcom has dominated with Google and Meta as key customers.

This article is for informational purposes only and does not constitute investment advice.