What Happened?

Shares of fabless chip and software maker Broadcom (NASDAQ:AVGO) fell 6.1% in the afternoon session as markets tumbled after holding steady the previous day, while concerns over the ongoing trade war continued to spread. 

Investors briefly felt some optimism after the Trump administration said it would hold off on tariffs for automakers that met USMCA (United States-Mexico-Canada Agreement) rules. That helped the auto sector in particular, and there was perhaps some hope that the door was open to more broadly delaying tariffs. The sentiment seemed to be shifting in the other direction today, and the market is in 'risk-off' mode, with sectors such as tech seeing outsized declines. As of this writing, the S&P 500 had fallen 7% from where it closed on February 19th and the Nasdaq Composite dropped 10% over the same period.

Separately, peer, Marvell, reported weak fourth quarter 2024 results. MRVL's inventory levels materially increased and its EBITDA missed. Outside of the strong double digit growth in the data center segment, MRVL's sales fell in other segments, hinting at potential demand weakness, especially in the semiconductor market.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Broadcom? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Broadcom’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 3 days ago when the stock dropped 6.3% as the major indices tumbled after the Trump administration confirmed that the planned 25% tariffs on imports from Canada and Mexico, two of the largest trading partners of the United States, would proceed as planned. The news added to the market's growing unease, which had been building since the start of 2025. For Wall Street analysts, investors, and businesses, the announcement underscored the urgent need to plan ahead and factor the potential downside of the tariffs into their financial forecasts. Key concerns included rising production costs, which are often passed on to consumers, and the risk of inflation, further heightening economic uncertainty.

Broadcom is down 22.2% since the beginning of the year, and at $180.49 per share, it is trading 27.8% below its 52-week high of $250 from December 2024. Investors who bought $1,000 worth of Broadcom’s shares 5 years ago would now be looking at an investment worth $6,698.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. We prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.