Broadcom shares fell 5.59% as AI margin concerns and Oracle spending amplify sector risks.

Broadcom shares fell 5.59% in pre-market trading on Monday, December 16, 2025, amid broader weakness in AI-related stocks as investor sentiment toward the sector cooled.

The decline followed concerns over narrowing profit margins in Broadcom’s AI business. During its earnings call, CEO Hock Tan highlighted that AI segments carry lower gross margins compared to other operations, signaling potential long-term pressure on overall profitability as AI revenue grows. This came alongside Oracle’s recent report, which revealed ballooning AI capital expenditures, amplifying market anxiety over sector-wide margin risks.

Despite record sales and earnings, the stock’s sharp drop reflected heightened scrutiny of AI infrastructure demand sustainability. Investors appeared to rotate out of the sector, with broader tech indices also retreating. While Broadcom’s AI backlog remains robust, the market’s focus shifted to execution challenges and whether current valuation multiples justify future growth expectations.

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