Opinion: Broadcom Is the Canary in the AI Coal Mine -- Just Not in the Way You Think
Broadcom investors' worries about this stock are far simpler and less of an issue than Thursday's stumble suggests.
Opinion: Broadcom Is the Canary in the AI Coal Mine -- Just Not in the Way You Think
Overview
Broadcom (NASDAQ: AVGO) shares crashed on Thursday following the release of its Q2 results the previous evening. The numbers were fine; revenue of $22.2 billion was up 48% year over year, topping estimates. But guidance disappointed... sort of.
CEO Hock Tan only reiterated the company's ambiguous expectations for full-year artificial intelligence (AI) chip revenue of "in excess of $100 billion" from its Q1 report. Investors wanted Broadcom to raise its own bar. When it didn't, they revolted, sending Broadcom shares as much as 14% lower, and dragging a handful of other AI tech stocks down with it.
Details
A growing number of investors seem to fear this single-day setback could mark the beginning of prolonged weakness stemming from AI's lack of clear, practical value. After all, most of Broadcom's business comes from other AI companies building capacity on the mere hope that enough actual business will follow. If this worry is legitimate, a sweeping correction is likely to come sooner rather than later.
Source
Originally published at www.fool.com.
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