Broadcom stock plunges 6% today: is the AI trade cracking?

Broadcom stock AVGO plunged about 6.6% in heavy trading on Tuesday as investors digested worries that rapid AI-driven sales could squeeze margins.

Tuesday’s slide took the Broadcom stock price to roughly $309 a share from the prior session’s close near $336, intensifying questions about whether the “AI trade” is beginning to show cracks.

Broadcom stock: Margins, backlog dynamics and profit-taking

The immediate trigger for the rout appears to be a replay of concerns first aired after Broadcom’s December guidance.

The investors expressed caution that the booming demand for custom AI processors comes with lower gross margins than the company’s legacy silicon businesses.

That warning has left investors parsing the trade-off between strong top-line growth and compressed profitability.

Reuters noted the earlier margin caveat that sparked a sharp December sell-off and remains the reference point for market angst.

Behind the headline numbers, the company’s large AI order book…