Wall Street chip stocks were mauled and bled on Thursday after an underwhelming AI revenue forecast by Broadcom Inc. during their second quarter earnings commentary.
Broadcom's shares dived as much as nearly 16% to hit a low of $403; as of 10:46 a.m. EST, the stock traded 14.5% lower at $409.40.
The sharp fall comes after the company's forecast for sales of its artificial intelligence chips failed to enthuse investors. AI semiconductor revenue was seen at $16 billion in the third quarter of the current fiscal, well below analysts' expectations of $17.2 billion on average.
However, total revenue forecast of $29.4 billion for quarter-ended July, exceeded wall street expectations of $28.6 billion on average.
The disappoitment rippled through to other major chipmakers, with Advanced Micro Devices Inc.(AMD) and Micron Technology (MU) plunging nearly 7% and 10% to lows of $500 and $972, respectively.
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Qualcomm Inc.'s scrip slumped 5% to $238.70., Intel Corp. erased its previous session's computex-powered gains and declined over 4% to a low of $107.5. Nvidia Corp. slipped 1% to $210.97, but later recovered to trade at $214.75 levels.
Turmoil has been brewing in the tech world ever since Nvidia announced its blockbuster partnership with Microsoft to manufacture the next generation of PCs. The 'spark' deal meant major gains for Nvidia, Microsoft and PC manufacturers like Dell and HP; but at the same time spelled trouble for rivals like AMD and Intel.
Software companies also took a beating worldwide after downgrades and target price cuts from brokerages like Truist and Citi, citing AI-led pressure on these companies.
Truist downgraded Accenture to 'Hold' and slashed the target price to $210 from $269. Similarly, Citi has cut the company's target price to $195 from $215 while maintaining a neutral rating.
Brokerages flagged that AI-native firms are increasing competition for IT services. Concerns also rose over artificial intelligence headcount-based pricing models.
The global tech selloff was a sharp U-turn from a Jensen Huang-powered rally after he had dispelled fears surrounding the co-existence of AI with software firms, calling it the "best time" to be a software company.
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