AI sector faces market sell-off! Broadcom Inc. (AVGO.US) impressive financial report unable to stop sentiment reversal, stock price plunges over 11% for worst single-day performance since January.

Broadcom Inc. (AVGO.US) latest quarterly performance and performance guidance significantly exceeded Wall Street expectations, but market sentiment suddenly turned downwards, with investors showing a noticeable cooling towards AI trading, leading to a concentrated sell-off of related stocks. Broadcom Inc. shares plunged over 11% on Friday, marking their worst single-day performance since January. The pullback in the AI sector is not an isolated case. Oracle Corporation (ORCL.US) has continued to plummet significantly after reporting earnings, with a nearly 4.5% drop on Friday following a 10% drop the day before. Leading companies like NVIDIA Corporation (NVDA.US) and AMD (AMD.US) were also not spared, with their stock prices falling by about 3% and 5%, respectively. As a core theme driving the performance of the US stock market and the overall economy this year, the weakening sentiment towards AI has quickly spread to the broader market. The Nasdaq index fell by about 1.69% on Friday, while the S&P 500 dropped by 1.07%. Companies deeply involved in AI infrastructure construction have been most affected. With cloud computing giants continuing to expand data centers to meet the nearly infinite computing power demand, these companies, which had seen significant stock price surges earlier, are now under pressure. Broadcom Inc. is an important supplier of customized AI chips for several large tech companies, with its market value nearly doubling over the past two years and expected to continue rising until 2025. The stock had accumulated gains of up to 75% to 80% so far this year. Rakesh Vijay, an analyst at Mizuho Securities, stated that the current price decline is more due to profit-taking rather than deteriorating fundamentals, calling it a normal pullback and indicating that they would buy at this level. Mizuho has raised Broadcom Inc.'s target price from $435 to $450, while the stock closed on Friday slightly below $360. Fundamentally, Broadcom Inc.'s performance remains strong. The company achieved a 28% year-on-year revenue growth in the quarter, with AI chip sales soaring by 74%, driving total revenue to $18.02 billion, exceeding the analyst average expectation of $17.49 billion. Adjusted earnings per share were $1.95, also surpassing the market expectation of $1.86. CEO Hock Tan stated that the company expects AI chip sales to double year-on-year to $8.2 billion this quarter, driven by custom AI chips and AI-related semiconductor products. However, some investors are concerned about the short-term profitabil...