Broadcom Sinks 9% as AI Regulation Fears Deepen Chip Rout

Key Takeaways

• Broadcom fell 9% today on fears that Democrats’ midterm wins will slow US data center building.
• Analysts expect Broadcom’s normalized EPS to nearly triple from fiscal 2025 to fiscal 2027.
• The selloff prices in a policy risk that hasn’t touched Broadcom’s results, and the stock went in below its usual multiple.
• The test is Broadcom’s Dec. 9 report and its fiscal 2027 AI outlook.

Broadcom (AVGO) is down 9% today with no news of its own, in a chip rout across the AI supply chain.

Democrats won both chambers of Congress in the Nov. 3 midterms, and traders fear tighter AI rules and slower data center construction. A big phone chipmaker’s guidance after Wednesday’s close added to the selling.

The rest of the AI supply chain fell harder

Suppliers deeper in the AI build-out had a worse day than Broadcom, though both had just reported strong quarters. Chip packager ASE Technology Holding Co. (ASX) is off 19%, a week after a strong…