The artificial-intelligence semiconductor trade suffered a violent whipsaw as investors repriced data-center growth risks. Broadcom closed Thursday down 10.43% at $291.53, while the Philadelphia Semiconductor Index dropped 12.3% and the iShares Semiconductor ETF lost 12.8%—the sector's worst session since March 2020. The broader Nasdaq 100 fell 6.4%, and Wall Street shed roughly $2.5 trillion in market value.
Broadcom's decline came despite strong AI revenue. In its fiscal third quarter, the company reported $16.7 billion of AI semiconductor revenue, up 221% year over year, and guided fourth-quarter AI semiconductor revenue to about $21.7 billion, up 236%. Chief Executive Hock Tan has forecast AI revenue of approximately $115 billion for fiscal 2027 and around $230 billion for fiscal 2028. The selloff reflected concern that U.S. midterm results will lead to tighter permitting, power and water restrictions for data-center construction, with voters in 40 of 41 local ballot contests favoring limits on development.
The rout hit peers harder: Micron fell 17.5%, AMD dropped 17.3%, Marvell lost 16.4%, Arm declined 13.1%, TSMC fell 10.8% and Nvidia fell 9.3%. On Friday, Nvidia rebounded 2.78% to $186.64, AMD jumped 11.04% to $449.04 and Broadcom traded around $297.39, but the recovery remained small relative to the week's damage. Asian markets also felt pressure: South Korea's KOSPI lost 6% Friday, Taiwan's benchmark fell more than 8% for the week, and TSMC hit its daily limit-down threshold, prompting Taiwanese officials to ask state-owned banks to support prices.
Analysts described the damage in stark terms. Northlight Asset Management's Chris Zaccarelli said the narrative shifted from AI "changes everything" to fears that new data centers could become harder to build. LPL Financial's Adam Turnquist said the AI trade suffered "significant technical damage," while The Bahnsen Group's David Bahnsen cautioned that technology valuations remained too high. Reuters reported that the cost of insuring against a default by AI-cloud provider CoreWeave climbed above 1,000 basis points, signaling stress in the riskiest corners of AI financing.
For digital-asset markets, the tech-led risk-off mood added pressure. Bitcoin traded around $75,777, down about 2.4%, reflecting the broader pullback in risk assets as investors debated whether the AI infrastructure boom is facing a normal correction or an early-stage bubble unwind. Upcoming results from CoreWeave, Applied Materials and Cisco, along with inflation data, are expected to determine whether the selloff deepens or stabilizes.
