Broadcom Can’t Stop Falling. Overreaction or AI Stock Warning Sign?

1 day ago 4

Rich Duprey

Tue, December 16, 2025 astatine 8:49 AM CST 5 min read

Broadcom (AVGO) shares fell implicit 17% crossed 3 trading days contempt beating Q4 net expectations. Investors focused connected gross borderline unit from higher AI gross mix.
Broadcom AI gross deed $6.5B successful Q4, up 74% year-over-year. The institution secured large customized spot contracts with Google and Meta Platforms.
Analysts support Strong Buy ratings with a $455 mean terms target, implying 33% upside. Broadcom trades astatine a 0.69 PEG ratio with 36% expected semipermanent EPS growth.
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Broadcom (NASDAQ:AVGO) has delivered a beardown show successful 2025, with shares up astir 46% year-to-date, driven mostly by request for its artificial quality (AI)-related semiconductors and customized chips. The banal reached an all-time precocious of $414.61 per stock past week.

However, pursuing the company's fiscal fourth-quarter net report, its shares person declined sharply. The time aft it deed its highest -- which bushed expectations connected gross and net per stock -- the banal fell much than 11% successful a azygous league implicit concerns astir gross borderline unit from a higher premix of AI revenue. Additional declines followed, with shares dropping different 5.6% yesterday, resulting successful a cumulative driblet of much than 17% implicit 3 trading days. Broadcom's banal is trending little again this greeting successful premarket trading.

Broader concerns astir AI concern returns and profitability person pressured aggregate AI-related stocks successful caller weeks, though Broadcom had held up amended until this pullback. Shares are astir level implicit the anterior month.

The question for investors is, does this crisp driblet bespeak much downside ahead, oregon is it a back-up-the-truck accidental successful a institution with robust semipermanent AI prospects?

Broadcom's ascent successful 2025 stemmed chiefly from explosive maturation successful its AI semiconductor business. Fiscal fourth-quarter AI gross deed $6.5 billion, up 74% year-over-year, reflecting beardown request for customized AI processors and networking solutions from hyperscalers specified arsenic Google, Meta Platforms (NASDAQ:META), Anthropic, and OpenAI.

The chipmaker secured large contracts, including partnerships for customized chips, that contributed to wide gross maturation of 28% successful the quarter. Its infrastructure bundle conception -- bolstered by the 2023 VMware acquisition -- provided further ssupport with recurring subscription revenue.

These factors propelled the stock's gains this year, outpacing galore peers and solidifying Broadcom's presumption arsenic a cardinal beneficiary of the AI infrastructure buildout.