By Marcus Webb | June 4, 2026
Broadcom shares fell 4.2% on Thursday after Morgan Stanley downgraded the stock from Overweight to Equal Weight, citing concerns about slowing custom-chip orders from hyperscale cloud customers. The downgrade briefly dragged the Philadelphia Semiconductor Index down 1.5% before the broader market rally lifted it back to a loss of just 1.2% on the session.
The Morgan Stanley note estimated that Broadcom’s custom AI chip revenue could decelerate from 65% growth in fiscal 2026 to roughly 25% in fiscal 2027 as hyperscalers bring more design work in-house. The thesis isn’t new, but coming from a bulge-bracket firm, it carried weight — 4.2 million shares changed hands in the first hour alone.
For the broader chip sector, the selling was contained. Nvidia closed up 0.5%. AMD slipped 0.3%. Micron added 0.8%. The market drew a clear line: Broadcom’s issue is company-specific, not sector-wide. The rest of the semiconductor universe was largely unaffected.
