Tech stocks fell Thursday, along with chipmakers Broadcom And Micron technology leading losses as investors fled the semiconductor sector.
Broadcom shares fell 13% after the company, which designs and manufactures custom artificial intelligence chips for other tech names, reported weaker than expected profits on Wednesday.
Micron Technology was down more than 6%.
John Vinh, equity research analyst at Keybanc Capital Markets, said the growing pressure on Broadcom and other semiconductor stocks is justified.
“These stocks have all seen very strong gains,” Vinh told CNBC’s “Squawk Box” on Thursday, pointing to repeated upward revisions, particularly on the AI front. Vinh suggested that Broadcom’s reversal indicates that market expectations have caught up with the trend in the chip sector.
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Broadcom.
Elsewhere, ARM funds stocks fell 6%, Qualcomm sank 3% and Intel fell 2%, while AMD slipped 3%. Marvell Technology stocks initially fell on Thursday, but then turned positive.
In a note released Thursday, HSBC analysts led by chief multi-asset strategist Max Kettner flagged falling chip prices, coupled with a slowdown in AI spending and deployment, among their “biggest concerns.”
Vinh noted that Broadcom has suffered some loss of market share at its largest customer, Google, which has begun to diversify into other chip suppliers.
“The short-term pullback makes sense,” Vinh said, while adding that he remains optimistic about Broadcom.
Keith Lerner, CIO and chief market strategist at Truist Wealth, said a selloff was normal after a strong run, adding that “we need to rest.”
“We have come a long way. The fundamentals are solid,” he said on CNBC “Closing bell” Wednesday.
“The bull market always deserves the benefit of the doubt, but often markets take two steps forward, one step back. We took three steps forward, so maybe at least a mini step back, or at least a small step back,” Lerner said.
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