Broadcom Stock Falls to $321 on AI Chip Deal Worries Ahead of Earnings
Broadcom’s stock has faced significant declines as concerns about the competitive landscape of AI chips grow. On February 24, 2026, shares dropped approximately 3%, settling at $320.70. This follows a 0.7% decline the previous day, indicating ongoing market volatility.
Broadcom Stock Performance
In the latest trading session, Broadcom’s stock (AVGO) fluctuated between $314.67 and $324.13, with a trading volume of around 5.1 million shares. This decline continues a negative trend that investors have been monitoring closely.
Impact of Market Developments
- Meta Platforms signed a five-year supply agreement with AMD.
- AMD will supply up to $60 billion in AI chips for Meta.
- This strategic partnership diversifies Meta’s supplier base and reduces reliance on a single vendor.
In reaction to the news, shares of AMD experienced a surge of approximately 7.5%, while Nvidia’s stock remained largely unchanged pending an upcoming earnings report.
Investor Sentiment and Concerns
Investor confidence is wavering, particularly regarding AI spending. Concerns about a possible bubble in the sector have emerged, as highlighted by analysts like Matt Britzman of Hargreaves Lansdown. The importance of steady demand amidst unpredictable margins is becoming a focal point for investors.
Upcoming Earnings Report
Broadcom is scheduled to release its first-quarter fiscal 2026 earnings on March 4, which follows Nvidia’s announcements. Key areas of focus include:
- Traction and demand forecasts for AI chips.
- Projected trends in gross margins.
- Insights on the company’s software segment.
CFO Kirsten Spears has hinted at expected pressure on margins, forecasting a sequential decline of one percentage point in gross margins. Additionally, concerns linger over Broadcom’s customer concentration, with a significant portion of its backlog dependent on just five clients.
The Future Direction for Broadcom
Broadcom’s role in the AI market is increasingly complex. The company develops specialized Application-Specific Integrated Circuits (ASICs) and advanced switching chips tailored for AI data centers. However, translating AI orders into profitable revenue remains a challenge. With the evolving landscape of AI hardware, Broadcom must navigate these challenges effectively to reassure its investors and strengthen its position within the semiconductor industry.
