Shares of technology companies fell as chip makers tumbled due to Broadcom's failure to meet lofty Wall Street expectations for artificial-intelligence revenue.
Shares of Broadcom fell by more than 10% after it reiterated the AI chip sales forecast it gave in its last report three months ago. Investors were blindsided by the conservative guidance, particularly in light of the massive $80 billion capital-raise plan disclosure from Google, which is Broadcom's largest AI chip customer.
The PHLX Sox Semiconductor index was down by more than 5% at one stage before recovering the bulk of its losses. The large-cap chip makers in the index have more than doubled in value, on average, in the last 12 months.
"Positioning has...reached levels that warrant a contrarian lens, particularly in the tech sector where exposure is becoming crowded and sentiment increasingly stretched," said Adam Turnquist, chief technical strategist at brokerage LPL Financial. "Signs of FOMO-driven activity are evident in elevated upside call buying."
Quantinuum stock popped in its trading debut, opening 13% above its initial public offering price in a major win for the quantum computing industry. Other quantum-computing stocks were mixed following a torrid run.
