Broadcom Falls 6% as AI Trade Cools

Broadcom Inc., the semiconductor and infrastructure software company, fell about 5.5% on Friday as part of a broader pullback in technology stocks following the S&P 500's rise to a record high. Broadcom was the biggest drag on the S&P 500 information technology sector, which fell about 0.5% overall, while the Philadelphia Semiconductor Index declined roughly 1%. Applied Materials also suffered a steep drop of more than 5% on the same day, a decline made notable by the fact that the company had raised its revenue forecast above expectations—indicating that strong corporate guidance alone was insufficient to shield chip stocks from the broader market rotation. The pullback occurred amid softer U.S. retail sales and renewed Middle East tensions, both of which weighed on investor risk appetite. Broadcom's acute sensitivity to the AI trade pullback reflects its position as one of the biggest winners from spending on custom AI accelerators and networking equipment. However, analysts noted that Friday's sell-off, while sharp, does not alter the company's long-term AI opportunity, and the decline reveals the risks embedded in AI stocks after their substantial gains: crowded positioning can trigger sharp drops when market sentiment shifts, even without negative company-specific news.