Semiconductor and AI-linked stocks came under heavy pressure in premarket trading on Monday, with Broadcom and Arm Holdings among the hardest hit as a broader technology selloff gathered pace. Broadcom shares fell 3.2% to $350.48, while Arm Holdings dropped about 7% after recent comments from major AI company leaders warning about risks tied to rapid AI development triggered risk-off moves across chip names.
The wider equity market was also weak, with the Nasdaq off 1.8%, the S&P 500 down 0.8%, and the Dow Jones Industrial Average lower by 0.3%. Broadcom’s drop added to a decline of roughly 5% over the previous 12 sessions, testing the lower boundary of a consolidation range that has held since its September 2 earnings report. The company’s fiscal Q4 revenue guidance of $34.8 billion came in slightly below Wall Street’s consensus of $35.03 billion, keeping near-term sentiment cautious even as longer-range AI revenue targets impressed. Management has guided for $115 billion in AI revenue in fiscal 2027, rising to $230 billion in fiscal 2028, backed by multi-gigawatt XPU deployment commitments from Anthropic, OpenAI, Alphabet and Meta.
Analyst views remained mixed. Mizuho Securities reiterated a Buy rating with a $530 price target, implying roughly 51% upside, while at least one research note issued a Sell, arguing the valuation around 30x forward non-GAAP earnings already prices in the bull case. Among 30 surveyed analysts, the average 12-month price target for AVGO stands at $519.21, with a Strong Buy consensus. Broadcom is up about 4.59% year-to-date and carries a market capitalization near $1.7 trillion.
Arm Holdings faced its own challenges. Valuation concerns were highlighted by an HSBC downgrade to Hold in July, with the stock trading around 110 times forward earnings. The company also faces US Federal Trade Commission scrutiny over chip licensing practices and investor unease about majority owner SoftBank’s leveraged AI investment strategy. Piper Sandler initiated coverage with an Overweight rating on September 9, citing Arm’s dominant CPU intellectual property position and server CPU design wins, but that positive call has not yet provided lasting support. Arm’s licensing and royalty model remains a key strength, generating strong margins and cash flow, while adoption of Arm-based CPUs in data centres and AI infrastructure could support more recurring revenue over time.
The crypto market may take short-term directional cues from the risk-off tone in equities, although no major cryptocurrency was directly named in the reports.
