Broadcom Stock Drops to $321 Amid AI Chip Deal Concerns Before Earnings
Broadcom’s stock has declined significantly amid increasing concerns over the competitive landscape of AI chips. As of February 24, 2026, shares have dropped approximately 3%, reaching $320.70 after losing 0.7% the previous day. This downturn coincides with growing apprehensions about AI chip demand following a substantial agreement between Meta and AMD.
Broadcom Stock Performance
During the latest trading session, Broadcom’s stock (AVGO) traded between $314.67 and $324.13, with a volume of around 5.1 million shares. The recent decline is particularly impactful as it marks the continuation of losses that started the previous day.
AI Chip Agreements and Market Reaction
The market has reacted sharply to Meta Platforms’ five-year supply agreement with Advanced Micro Devices (AMD), wherein AMD will supply up to $60 billion in AI chips to Meta. This partnership marks a strategic shift for Meta as it aims to diversify its suppliers and mitigate risks by not relying on a single vendor.
- Stock Price Movement: Broadcom shares down 2.9% to $320.70.
- Volume Traded: Approximately 5.1 million shares.
- AMD Stock Surge: Increased by around 7.5% following the announcement.
- Nvidia Status: Stock remains largely unchanged, with earnings report pending.
Investor Concerns Surrounding AI Spending
Investors are becoming increasingly cautious regarding AI spending, especially with the potential for a bubble. This sentiment was echoed by notable analysts, including Matt Britzman from Hargreaves Lansdown, highlighting the importance of steady demand amid fluctuating margins.
Upcoming Earnings and Projections
Broadcom is set to report its first-quarter fiscal 2026 earnings on March 4, following Nvidia’s earnings announcement. Investors are particularly focused on:
- AI chip traction and demand forecast.
- Projected gross margin trends.
- Insights regarding the software segment.
CFO Kirsten Spears indicated potential pressure on margins, anticipating a one-percentage-point dip in gross margin sequentially. Additionally, analysts have raised concerns about Broadcom’s customer concentration, with much of the backlog dependent on just five clients.
The Road Ahead for Broadcom
Broadcom’s position in the AI market is complex. While the company designs custom Application-Specific Integrated Circuits (ASICs) and advanced switching chips for AI data centers, it faces challenges in converting AI orders into profitable revenue streams.
As the landscape for AI hardware evolves, Broadcom must navigate these market changes carefully to reassure investors and solidify its role in the semiconductor industry.
