$AVGO

Broadcom CEO Hock Tan warned that financing costs and access to capital could slow AI spending growth, impacting Broadcom and other AI chip suppliers like Nvidia and Marvell. He noted that high investor expectations may not align with AI project profitability.

Broadcom (AVGO) shares fell 3.3% on Wednesday, aligning with a broader semiconductor sector decline. CEO Hock Tan's comments about AI investment expectations and OpenAI's profitability concerns contributed to the drop. Broadcom reported $16.7B in Q3 AI semiconductor revenue, up 221% YoY, and forecasts $21.7B for Q4. Technical analysis indicates bearish intermediate-term trends, with key support at $343 and resistance at $366.50.

Broadcom (AVGO) reported strong fiscal Q3 results with $29.59B revenue (up 85.5%) and $3.32 EPS, driven by AI semiconductor revenue growth of 221%. The company guided to $21.7B AI revenue in Q4. 24/7 Wall St. set a $429.85 price target (18.89% upside) with a 'BUY' rating, citing strong fundamentals and long-term AI demand.

BNP Paribas reduced its price target for Broadcom from $715 to $540. The stock traded at $357.31, up 0.73% in pre-market. The change may impact investor expectations for Broadcom's valuation.

Analysts updated ratings and price targets for several companies. Albemarle (ALB) was upgraded to buy with a $130 target by Mizuho. Dell (DELL) and Domino's (DPZ) were downgraded by Barclays and Gordon Haskett, respectively. Other notable changes include upgrades for Galaxy Digital (GLXY) and Trane (TT), and downgrades for Carrier (CARR), Lennox (LII), and more. Price targets were adjusted accordingly.

Big Tech companies are increasingly designing custom AI chips, benefiting chipmakers like Broadcom (AVGO), Marvell (MRVL), and TSMC (TSM). Alphabet (GOOGL, GOOG) and Microsoft are among those investing heavily in custom processors, with Broadcom reporting AI semiconductor revenue of $56B this year. TSMC, manufacturing most advanced processors, saw Q2 sales rise 36% to $40B. Nvidia (NVDA) and AMD (AMD) also play key roles, with AMD's Q2 sales up 50% to $11.5B.

US stocks closed mixed. The Dow fell 173 points, while the S&P 500 and Nasdaq declined slightly. Bank earnings were mixed, with JPMorgan Chase and Wells Fargo underperforming, while Goldman Sachs and Citigroup exceeded expectations. Semiconductor stocks dropped due to Chinese competition and valuation concerns, with Micron Technology and Applied Materials leading declines. Analysts expect S&P 500 earnings to rise over 30% year-over-year, driven by AI-related tech companies.

FTSE 100 ended slightly lower amid tech valuation concerns, with the index closing at 10,650.33. European tech stocks fell following declines in Asian semiconductor shares. ASML and Micron Technology also dropped. Broadcom's CEO warned about AI investment risks. US banks reported mixed earnings, with Goldman Sachs and JP Morgan up, while Citigroup fell. LSEG confirmed talks to buy Octus for $3.5B. Entain and YouGov rose on positive updates.

Asian markets fell sharply, led by Taiwan's TAIEX, which dropped 1.95% due to tech stock declines. Taiwan Semiconductor Manufacturing Co fell 1.97%, while Nanya Technology Corp slid 7.4%. South Korea's KOSPI fell 5.5%, with Samsung and SK Hynix down over 7% and 10% respectively. Japanese stocks also declined, with chipmakers Kioxia, Tokyo Electron, and Advantest falling over 7%.

AI-related stocks fell sharply, with South Korean chipmakers down over 6% and US semiconductor index dropping 1.7%. Concerns about rising interest rates and higher bond volatility are impacting AI investments. The IMF warned of potential global consequences from an AI correction. Firmus canceled a $5B IPO, and Tencent's bond sale faced higher yields. Experts note a shift in focus to monetization and returns on capital.