Sources: Reuters | Investing.com
TLDR
- Broadcom shares fell 11.5% on Friday, December 15, as part of a broader tech sector selloff
- The stock dropped 11.4% in pre-market trading, aligning with Nasdaq-100 declines of 1.7%
- Broadcom beat earnings expectations with $18 billion in revenue versus $17.5 billion estimated
- Investor concerns centered on premium valuations, profit-taking, and slowing global IT spending trends
- Despite the drop, Broadcom remains up approximately 55% year-to-date for 2025
Broadcom shares took a serious hit on Friday, December 15, dropping 11.5% in what turned out to be a rough day for tech stocks. The semiconductor giant saw an 11.4% decline in pre-market trading before finishing the day deep in the red.
The selloff came as investors questioned whether AI-focused companies had run too far, too fast. Oracle, another major player in the AI space, lost 15% for the week, showing Broadcom wasn’t alone in the pain.
The Nasdaq-100 fell 1.7% on the day, while the S&P 500 dropped 1.1%. This marked the 28th time this year that the S&P 500 has declined by more than 1% in a single session.
Here’s the twist: Broadcom actually beat Wall Street’s expectations. Revenue hit $18 billion, topping analyst estimates of $17.5 billion. Operating profit came in at $11.9 billion, beating the projected $11.4 billion.
So why did the stock get hammered? A few quarters ago, these same numbers might have sent shares soaring by double digits.
Valuation Worries Take Center Stage
Institutional investors started taking profits off the table. Concerns about premium valuations in the tech sector triggered widespread selling across AI-related stocks.
Analysts point to worries about global IT spending trends as a key factor. Companies might be pulling back on technology investments as economic uncertainty grows.
Broadcom’s valuation had climbed to rich levels compared to other tech giants. Even companies like NVIDIA and Google, which dominate the AI space, trade at lower multiples.
The company’s quarterly forecast came in slightly below some investor hopes. While far from disastrous, the guidance wasn’t enough to justify the stock’s elevated price tag in current market conditions.
Risk aversion spread through the market as traders reassessed their AI bets. The excitement that drove tech stocks higher throughout the year started giving way to caution.
Long-Term Picture Remains Strong
Despite Friday’s drop, Broadcom is still up roughly 55% for 2025. The company had doubled in value in both 2023 and 2024, creating a string of impressive gains.
Analysts continue to praise Broadcom’s strong position in enterprise technology. The company maintains solid relationships with major customers and a robust product lineup.
The selloff marks the S&P 500’s 28th decline of more than 1% this year. Historical data shows markets have averaged 29 or more such drops per year since 1928, putting 2025 right in line with typical patterns.
Investor interest in AI stocks hasn’t disappeared entirely. The sector’s longer-term outlook still attracts attention, even as short-term volatility shakes out weak hands.
Broadcom’s operating profit of $11.9 billion exceeded expectations by $500 million. Revenue topped estimates by $500 million as well, showing the business fundamentals remain healthy even as the stock price struggled.
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