It was a week that tech investors will want to forget — but should not. The Philadelphia Semiconductor Index plunged 10.4% on Friday alone after Broadcom slashed its full-year guidance, marking the worst single-day drop for the sector since the 2022 bear market.
Here is what happened: Broadcom reported fiscal Q2 earnings that beat on revenue but guided Q3 revenue to 2.2 billion against consensus of 3.1 billion. The miss was entirely in custom AI chips — specifically the TPU-like accelerators Broadcom builds for hyperscale cloud customers. CEO Hock Tan cited inventory digestion and slower than expected deployment timelines. Wall Street heard: AI infrastructure spending is slowing down.
The selloff was brutal and indiscriminate. Nvidia fell 7.8%, AMD dropped 9.2%, Marvell lost 11.3%, and even memory maker Micron — which has nothing to do with Broadcom custom chip business — slid 6.5%. The SOX closed at 4,812, erasing all gains since early April.
But here is the nuance that got lost in the selling: Broadcom issue is company-specific. The custom ASIC market is increasingly competitive, with both Marvell and a resurgent Intel pushing for hyperscaler design wins. Nvidia CUDA moat in general-purpose AI training remains intact. The panic selling of every semi stock on Friday looks more like algorithmic liquidation than fundamental repricing.
The story next week is all about the bounce — or lack of one. If SOX finds support at 4,750 and stabilizes into Wednesday, the selloff was a healthy correction in a frothy sector. If selling continues and the index breaks below 4,600, the AI capex narrative is genuinely under threat. CPI on Thursday is the next catalyst: a cool print would provide cover for tech buyers to step back in.
