Broadcom Inc. shares experienced a dramatic 16% decline to hit a low of $403 following the company's disappointing third-quarter earnings forecast. According to reports from NDTV Profit, the stock traded 14.5% lower at $409.40 as of 10:46 a.m. EST on Thursday. The sharp fall came after Broadcom's forecast for AI chip sales of $16 billion in the third quarter fell short of analyst expectations of $17.2 billion on average. However, the company's total revenue forecast of $29.4 billion for the quarter-ended July exceeded Wall Street expectations of $28.6 billion on average.
The disappointment in Broadcom's AI revenue forecast created a ripple effect across the semiconductor sector. As reported by NDTV Profit, Advanced Micro Devices Inc. (AMD) and Micron Technology (MU) plunged nearly 7% and 10% respectively, hitting lows of $500 and $972. Qualcomm Inc. shares slumped 5% to $238.70, while Intel Corp. declined over 4% to a low of $107.5. Nvidia Corp. initially slipped 1% to $210.97 but later recovered to trade at $214.75 levels. According to Investing.com India, semiconductors initially tanked 5.2% in the first 20 minutes of trading after disappointing guidance from Broadcom and CrowdStrike, but dip buyers stepped in and after the first hour, semis were down less than 3.25%.
The broader tech selloff reflects growing concerns about artificial intelligence competition in the semiconductor and software sectors. According to NDTV Profit, the turmoil has been building since Nvidia announced its blockbuster partnership with Microsoft to manufacture next-generation PCs, which benefited Nvidia, Microsoft, and PC manufacturers like Dell and HP while creating challenges for rivals like AMD and Intel. Software companies also faced pressure after downgrades from brokerages citing AI-led competition for IT services. As reported by Investing.com India, today's semiconductor decline can be seen as a test of the AI boom, with the sector showing resilience as dip buying prevailed.
Major brokerages have downgraded several technology companies amid AI-related pressures. As reported by NDTV Profit, Truist downgraded Accenture to 'Hold' and slashed the target price to $210 from $269. Citi similarly cut Accenture's target price to $195 from $215 while maintaining a neutral rating. Brokerages flagged that AI-native firms are increasing competition for IT services, with concerns also rising over artificial intelligence headcount-based pricing models.
Indian IT stocks experienced a pullback on Thursday as traders booked profits following a sharp rally earlier this week. According to latest reports, Tata Consultancy Services Ltd. declined 1.1% to ₹2,216 after hitting a six-year low in the previous session, while Infosys Ltd., Oracle Financial Services Software Ltd., and Persistent Systems Ltd. each fell as much as 2.3%. The selling was widespread across the sector, with Coforge Ltd. dropping 2.1% to ₹1,391 and Mphasis Ltd. falling 1.9% to ₹2,245. However, Tech Mahindra Ltd. outperformed peers, rising as much as 1.3% to ₹1,491. Market participants viewed the decline as consolidation after recent gains rather than a sign of deteriorating business conditions.
