Tech Stocks Plunge, Ending S&P 500's Winning Streak
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 hours ago
0mins
Source: CNBC
- Market Pullback: On Friday, the S&P 500 fell by about 2%, ending a nine-week winning streak primarily due to a sharp sell-off in technology and AI infrastructure stocks, with the Nasdaq dropping approximately 3%, marking its worst day since October.
- AI Outlook Uncertainty: The AI trade began to wobble after Broadcom failed to raise its 2026 and 2027 AI semiconductor revenue outlook, which has raised widespread concerns in the market, although we believe the company remains conservative in its projections.
- Defensive Stocks Shine: In the context of potential economic slowdown due to rising interest rates, defensive stocks like Procter & Gamble rose over 4%, demonstrating their earnings are generally less sensitive to economic cycles, thus performing well amid market volatility.
- Key Upcoming Events: Next week features several significant events, including Honeywell's 2026 guidance update and Apple's Worldwide Developers Conference, where a new version of the Siri personal assistant is expected to be announced, while SpaceX is set to go public in what will be the largest IPO in history, drawing considerable market attention.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 418.910
Low
370.00
Averages
457.75
High
525.00
Current: 418.910
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Broadcom Q2 Earnings Beat Expectations but Stock Falls
- Earnings Beat: Broadcom reported Q2 2026 earnings of $2.44 per share, surpassing analyst expectations, with a GAAP profit of $1.91 per share, reflecting an 85% year-over-year increase; however, the stock fell 12.6%, indicating poor market reaction.
- Guidance Upgrade: The company raised its Q3 sales forecast to $29.4 billion, representing a 32% sequential increase and an impressive 89% year-over-year growth, showcasing Broadcom's competitive strength in the semiconductor market.
- AI Chip Sales Forecast: CEO Hock Tan indicated that $16 billion of the projected $29.4 billion revenue will come from AI chips, which, despite over 200% year-over-year growth, fell short of Wall Street's $17.2 billion forecast, disappointing investors.
- Market Reaction Analysis: Despite expectations of stable profit margins and overall solid growth, investor disappointment over the AI sales guidance led to a cautious outlook, causing the stock to decline by another 4.2% in early trading.
See More
Broadcom's Q2 Earnings Report Triggers Stock Plunge
- Stock Plunge: Broadcom (AVGO) shares fell over 14% post-earnings, erasing nearly $300 billion in market value, reflecting a market reevaluation of AI semiconductor growth expectations, which led to declines across the semiconductor sector.
- Strong Earnings Report: For Q2, Broadcom reported revenue of $22.19 billion, a 48% year-over-year increase, surpassing the consensus estimate of $22.13 billion, with adjusted EPS at $2.44, exceeding the $2.39 forecast, underscoring the company's pivotal role in AI infrastructure development.
- Conservative AI Revenue Outlook: Management projected Q3 AI chip revenue at approximately $16 billion, indicating significant growth but falling short of the market's consensus expectation of $17.2 billion, which dampened investor confidence in future growth prospects.
- Clear Long-Term Strategy: Broadcom reaffirmed its long-term target of achieving $100 billion in AI revenue by 2027, indicating confidence in sustained demand while emphasizing ongoing collaboration with hyperscale customers in the coming years.
See More
Broadcom Shares Slide on Disappointing AI Chip Sales Guidance
- Stock Decline: Broadcom (AVGO) closed at $385.73, down 7.92%, primarily due to investor disappointment over AI chip sales guidance, reflecting market concerns about the company's future growth prospects.
- Surge in Trading Volume: The company saw a trading volume of 50.3 million shares, approximately 95% above its three-month average of 25.7 million shares, indicating heightened market interest and volatility surrounding Broadcom's stock.
- Strong Earnings Report: Despite reporting second-quarter revenue of $22.19 billion, with AI semiconductor revenue more than doubling and AI bookings exceeding $30 billion, management's decision not to raise long-term AI revenue targets led to skepticism about future growth expectations.
- Market Reaction Analysis: Investors have raised expectations for Broadcom's AI business, with concerns not about weaker demand but whether custom AI chip bookings can convert to revenue quickly enough to support the company's goal of over $100 billion in AI semiconductor revenue by fiscal 2027.
See More
Broadcom Shares Slide on Disappointing AI Sales Guidance
- Stock Decline: Broadcom closed at $385.73 on Friday, down 7.92%, primarily due to investor disappointment over AI chip sales guidance and valuation concerns, reflecting a cautious market sentiment regarding the company's future growth prospects.
- Surge in Trading Volume: The company's trading volume reached 50.3 million shares, approximately 95% above its three-month average of 25.7 million shares, indicating a significant increase in market interest in Broadcom's stock, likely due to a reassessment of its AI business outlook.
- Strong Earnings Report: Despite reporting a fiscal second-quarter revenue of $22.19 billion, with AI semiconductor revenue more than doubling and AI bookings exceeding $30 billion, management's decision not to raise long-term AI revenue targets has led to market skepticism about future growth expectations.
- Market Reaction Analysis: The pullback in Broadcom's stock indicates that market expectations for its AI business are higher than actual demand, and investors will closely monitor whether custom AI chip bookings can quickly convert to revenue to support the company's goal of over $100 billion in AI semiconductor revenue by fiscal 2027.
See More
Market Reaction to Tech Stock Pullback
- Market Pullback Analysis: Esteemed finance professor Jeremy Siegel noted that the sell-off in tech stocks is a common reaction to rapid price increases, with the Nasdaq declining 4.7% this week yet still up 10.6% year-to-date in 2026, highlighting the tension between short-term volatility and long-term growth potential.
- Semiconductor Sector Performance: Siegel pointed out that semiconductor stocks have performed well in 2026, with the VanEck Semiconductor ETF rising 58% year-to-date, but faced a nearly 5% drop this week, indicating high volatility within the sector and fragile investor sentiment.
- AI-Driven Market Changes: Siegel believes that the current AI-driven market growth is different from past bubbles due to its potential for productivity enhancement, likening its societal impacts to the Industrial Revolution, emphasizing the uniqueness and potential of this technological transformation.
- Profitability Sustainability Warning: He cautioned that rapid price increases only make sense if companies can sustain their earnings; if profitability fluctuates significantly in the short term, it could lead to over-speculation in semiconductor stocks, increasing market risk.
See More
Coca-Cola Adjusts Strategy Amid Market Shifts
- Market Response: Amid a broader sell-off in tech stocks, Coca-Cola's (NYSE: KO) shares rose over 4%, indicating a shift in investor preference towards low-risk stocks, reflecting a growing appreciation for stable business models.
- Consumer Adaptation Strategy: CFO John Murphy stated at a consumer conference that Coca-Cola is working to make its drinks more affordable for budget-conscious shoppers, demonstrating the company's responsiveness to changing market demands.
- Product Innovation: The company is experimenting with various can sizes, price points, and single-serve options to cater to consumers across different income levels, which enhances market reach and potential sales growth.
- Investor Caution: Despite Coca-Cola's strong stock performance, the Motley Fool Stock Advisor analyst team highlighted that there are currently 10 stocks deemed more valuable for investment, cautioning investors to be prudent and avoid following market trends blindly.
See More
Broadcom Q2 Earnings Beat Expectations but Stock Falls
- Earnings Beat: Broadcom reported Q2 2026 earnings of $2.44 per share, surpassing analyst expectations, with a GAAP profit of $1.91 per share, reflecting an 85% year-over-year increase; however, the stock fell 12.6%, indicating poor market reaction.
- Guidance Upgrade: The company raised its Q3 sales forecast to $29.4 billion, representing a 32% sequential increase and an impressive 89% year-over-year growth, showcasing Broadcom's competitive strength in the semiconductor market.
- AI Chip Sales Forecast: CEO Hock Tan indicated that $16 billion of the projected $29.4 billion revenue will come from AI chips, which, despite over 200% year-over-year growth, fell short of Wall Street's $17.2 billion forecast, disappointing investors.
- Market Reaction Analysis: Despite expectations of stable profit margins and overall solid growth, investor disappointment over the AI sales guidance led to a cautious outlook, causing the stock to decline by another 4.2% in early trading.
See More
Broadcom's Q2 Earnings Report Triggers Stock Plunge
- Stock Plunge: Broadcom (AVGO) shares fell over 14% post-earnings, erasing nearly $300 billion in market value, reflecting a market reevaluation of AI semiconductor growth expectations, which led to declines across the semiconductor sector.
- Strong Earnings Report: For Q2, Broadcom reported revenue of $22.19 billion, a 48% year-over-year increase, surpassing the consensus estimate of $22.13 billion, with adjusted EPS at $2.44, exceeding the $2.39 forecast, underscoring the company's pivotal role in AI infrastructure development.
- Conservative AI Revenue Outlook: Management projected Q3 AI chip revenue at approximately $16 billion, indicating significant growth but falling short of the market's consensus expectation of $17.2 billion, which dampened investor confidence in future growth prospects.
- Clear Long-Term Strategy: Broadcom reaffirmed its long-term target of achieving $100 billion in AI revenue by 2027, indicating confidence in sustained demand while emphasizing ongoing collaboration with hyperscale customers in the coming years.
See More
Broadcom Shares Slide on Disappointing AI Chip Sales Guidance
- Stock Decline: Broadcom (AVGO) closed at $385.73, down 7.92%, primarily due to investor disappointment over AI chip sales guidance, reflecting market concerns about the company's future growth prospects.
- Surge in Trading Volume: The company saw a trading volume of 50.3 million shares, approximately 95% above its three-month average of 25.7 million shares, indicating heightened market interest and volatility surrounding Broadcom's stock.
- Strong Earnings Report: Despite reporting second-quarter revenue of $22.19 billion, with AI semiconductor revenue more than doubling and AI bookings exceeding $30 billion, management's decision not to raise long-term AI revenue targets led to skepticism about future growth expectations.
- Market Reaction Analysis: Investors have raised expectations for Broadcom's AI business, with concerns not about weaker demand but whether custom AI chip bookings can convert to revenue quickly enough to support the company's goal of over $100 billion in AI semiconductor revenue by fiscal 2027.
See More
Broadcom Shares Slide on Disappointing AI Sales Guidance
- Stock Decline: Broadcom closed at $385.73 on Friday, down 7.92%, primarily due to investor disappointment over AI chip sales guidance and valuation concerns, reflecting a cautious market sentiment regarding the company's future growth prospects.
- Surge in Trading Volume: The company's trading volume reached 50.3 million shares, approximately 95% above its three-month average of 25.7 million shares, indicating a significant increase in market interest in Broadcom's stock, likely due to a reassessment of its AI business outlook.
- Strong Earnings Report: Despite reporting a fiscal second-quarter revenue of $22.19 billion, with AI semiconductor revenue more than doubling and AI bookings exceeding $30 billion, management's decision not to raise long-term AI revenue targets has led to market skepticism about future growth expectations.
- Market Reaction Analysis: The pullback in Broadcom's stock indicates that market expectations for its AI business are higher than actual demand, and investors will closely monitor whether custom AI chip bookings can quickly convert to revenue to support the company's goal of over $100 billion in AI semiconductor revenue by fiscal 2027.
See More
Market Reaction to Tech Stock Pullback
- Market Pullback Analysis: Esteemed finance professor Jeremy Siegel noted that the sell-off in tech stocks is a common reaction to rapid price increases, with the Nasdaq declining 4.7% this week yet still up 10.6% year-to-date in 2026, highlighting the tension between short-term volatility and long-term growth potential.
- Semiconductor Sector Performance: Siegel pointed out that semiconductor stocks have performed well in 2026, with the VanEck Semiconductor ETF rising 58% year-to-date, but faced a nearly 5% drop this week, indicating high volatility within the sector and fragile investor sentiment.
- AI-Driven Market Changes: Siegel believes that the current AI-driven market growth is different from past bubbles due to its potential for productivity enhancement, likening its societal impacts to the Industrial Revolution, emphasizing the uniqueness and potential of this technological transformation.
- Profitability Sustainability Warning: He cautioned that rapid price increases only make sense if companies can sustain their earnings; if profitability fluctuates significantly in the short term, it could lead to over-speculation in semiconductor stocks, increasing market risk.
See More
Coca-Cola Adjusts Strategy Amid Market Shifts
- Market Response: Amid a broader sell-off in tech stocks, Coca-Cola's (NYSE: KO) shares rose over 4%, indicating a shift in investor preference towards low-risk stocks, reflecting a growing appreciation for stable business models.
- Consumer Adaptation Strategy: CFO John Murphy stated at a consumer conference that Coca-Cola is working to make its drinks more affordable for budget-conscious shoppers, demonstrating the company's responsiveness to changing market demands.
- Product Innovation: The company is experimenting with various can sizes, price points, and single-serve options to cater to consumers across different income levels, which enhances market reach and potential sales growth.
- Investor Caution: Despite Coca-Cola's strong stock performance, the Motley Fool Stock Advisor analyst team highlighted that there are currently 10 stocks deemed more valuable for investment, cautioning investors to be prudent and avoid following market trends blindly.
See More
