Broadcom shares advanced 2.5% to $341.17 during Monday morning trading, leading a broader recovery across the semiconductor sector following last week's AI-driven selloff. The stock traded between $327.22 and $341.34 as buying interest returned.
AI Investment Crosscurrents
The move highlights Broadcom's role as a key beneficiary of massive technology infrastructure spending. The four largest U.S. tech companies reportedly plan $650 billion in capital expenditures this year, primarily for data centers and equipment that require semiconductor components. This sustained investment has kept chip demand in focus despite broader market uncertainty.
Broadcom occupies a unique position spanning both hardware and software markets. Last week's pullback in software stocks reflected concerns that artificial intelligence tools might disrupt traditional software business models, contributing to a sector rotation away from technology names.
Sector Performance Divergence
Semiconductor exchange-traded funds outperformed broader indexes during the session. The VanEck Semiconductor ETF (SMH) gained 0.8%, while the iShares Semiconductor ETF (SOXX) added 0.2%. In contrast, the S&P 500 ETF (SPY) edged up just 0.1%, and the Nasdaq-100 tracker (QQQ) was largely unchanged.
Individual chipmakers showed mixed performance within the AI supply chain. Nvidia rose 3.3% and Advanced Micro Devices gained 1.6%, while Marvell Technology slipped 0.3%. Broader markets opened weaker, with the Nasdaq down 0.34% at the opening bell before recovering.
Profitability Concerns Persist
Despite the rebound, analysts remain cautious about semiconductor stocks' sustainability. "After a hectic week last week, basically the size of the rebound that we saw on Friday didn't feel like the beginning of a sustainable reversal in losses," noted Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
For Broadcom specifically, profitability questions linger. The company warned in December that growing sales of lower-margin custom AI processors were squeezing profitability, raising questions about how lucrative the next phase of AI hardware demand will prove.
Investors will get their next significant data point when Broadcom reports fiscal first-quarter results on March 4 after market close. The company will host a conference call at 2 p.m. Pacific time that day.
