Broadcom Sparks AI Stock Sell-Off Despite Strong Jobs Data
Broadcom Sparks AI Stock Sell-Off Despite Strong Jobs Data
Publish Date: 2026-06-07 07:00:00
Source Domain: www.forbes.com
Broadcom shares came under pressure after its earnings report failed to lift 2027 AI revenue guidance, helping spark a broader sell-off in AI and semiconductor stocks. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
Despite a much better-than-expected monthly jobs report and the S&P 500 hitting new highs earlier in the week, stocks sold off sharply last week. The pain was primarily in technology and artificial intelligence (AI) related stocks.
Market Reaction
As would be expected in a tech-focused sell-off, the Magnificent 7 underperformed last week. The relatively small 0.5% decline in the average stock price shows that the stock swoon was not very broad, but centered on tech and AI-related companies.
Market Performance
Glenview Trust, Bloomberg
The proximate cause of the sharp decline in tech and AI stocks was Broadcom’s (AVGO) quarterly earnings report on Wednesday. While sales and earnings for the quarter were above expectations, 2027 AI revenue guidance was left unchanged. With the stellar growth of agentic AI, expectations were for a robust increase in management guidance. This shortfall raised concerns about the AI spending cycle in general and Broadcom’s competitive position.
The profit-taking in the tech and AI-related sectors should be kept in proper perspective; the iShares Future AI and Tech ETF (ARTY) remains almost 47% higher year-to-date after declining 12.5% off its peak. Further, the semiconductor sector, which is Broadcom’s home, has been rising at a torrid pace. Even after last week’s decline, the sector is still up over 33% year-to-date, while Broadcom remains 11.5% higher. Another example is Micron Technology (MU), which is still up over 200% year-to-date, despite falling 11% last week.
Tech Wreck
Glenview Trust, Bloomberg
Earnings
According to FactSet data, the technology sector should continue to post robust earnings growth. The second-quarter technology earnings growth is…
