Broadcom (AVGO) Plummets 2.74% Amid AI Sector Volatility: What’s Brewing in the Chip Market?

Summary
• Broadcom (AVGO) trades at $300.2, down 2.74% from its previous close of $308.65
• Intraday range: $299.86 (low) to $307.01 (high) on 1.82M turnover
• Nvidia’s AI optimism clashes with sector-wide regulatory and growth concerns
• Analysts highlight Broadcom’s 30% YTD rally amid AI infrastructure demand
• Options activity surges as traders bet on near-term volatility

Broadcom’s sharp intraday decline reflects a broader tug-of-war in the semiconductor sector, where AI-driven optimism from Nvidia clashes with regulatory headwinds and slowing growth signals. The stock’s 2.74% drop to $300.2 underscores investor caution as sector peers like Intel (INTC) also face mixed momentum. With Broadcom’s AI-focused chips integral to cloud infrastructure, the move highlights the fragility of the sector’s growth narrative.

Nvidia’s AI Optimism Clashes with Sector-Wide Uncertainty
Broadcom’s intraday selloff follows a mixed reaction to Nvidia’s Q2 results, which highlighted a $46.74B revenue surge but also flagged China-related uncertainties and slowing growth. While Nvidia’s Blackwell AI platform and $60B buyback boosted sector sentiment, regulatory scrutiny over H20 chip sales to China and Beijing’s push for domestic alternatives created a tug-of-war. Broadcom, a key supplier of networking solutions for AI infrastructure, initially benefited from the AI spending boom but now faces pressure as investors weigh near-term risks. The stock’s 2.74% drop reflects a shift in sentiment, with traders factoring in China’s AI chip self-sufficiency goals and sector-wide margin pressures.

Semiconductor Sector Splits as AI Optimism Meets Regulatory Headwinds
The semiconductor sector remains fragmented, with Intel (INTC) down 0.42% and TSMC’s 40% YTD revenue surge highlighting divergent trajectories. China’s push to triple AI chip production and its crackdown on foreign purchases of Nvidia’s H20 chips have created a bifurcation: firms with strong AI exposure (e.g., Broadcom) face growth opportunities, while those reliant on legacy markets (e.g., Intel) struggle. The sector’s mixed response underscores the challenge of converting AI demand into sustainable revenue amid geopolitical tensions and domestic chipmaking ambitions.

Options Playbook: Capitalizing on AVGO’s Volatility with Strategic Put/Call Pairs
• MACD: 3.79 (bullish divergence), Signal Line: 4.86, Histogram: -1.07 (bearish crossover)
• RSI: 53.25 (neutral), Bollinger Bands: $285.66 (lower) to $315.30 (upper)
• 200D MA: $226.38 (far below current price), 30D MA: $297.01 (support zone)

Broadcom’s technicals suggest a short-term bearish bias, with the 200D MA acting as a strong floor. The stock is testing its 30D support zone ($293.66–$294.34) and faces resistance at the 200D MA. A break below $299.86 (intraday low) could trigger a test of the 52W low ($134.90).

Top Options Picks:
• AVGO20250905P295 (Put):
- Strike: $295, Expiration: 2025-09-05, IV: 63.07%, Leverage: 33.68%, Delta: -0.415, Theta: -0.0938, Gamma: 0.0139, Turnover: $115,578
- IV (high volatility), Leverage (moderate), Delta (moderate sensitivity), Theta (slow decay), Gamma (high sensitivity to price swings).
- This put option offers a 57.66% price change potential if AVGO drops 5% to $285.2. Ideal for short-term bearish bets with high gamma to capitalize on volatility.
• AVGO20250905C300 (Call):
- Strike: $300, Expiration: 2025-09-05, IV: 62.03%, Leverage: 27.72%, Delta: 0.513, Theta: -1.2966, Gamma: 0.0145, Turnover: $549,009
- IV (high volatility), Leverage (moderate), Delta (moderate sensitivity), Theta (rapid decay), Gamma (high sensitivity).
- This call offers a -35.88% price change potential if AVGO rallies 5% to $315.2. Suitable for aggressive bulls expecting a rebound above $300.2.

Action Insight: Aggressive traders may consider a short strangle (AVGO20250905P295 + AVGO20250905C300) to profit from a $295–$300 range-bound trade. If $295 breaks, the put offers downside protection; if $300 holds, the call captures upside.

Backtest Broadcom Stock Performance

Bullish Breakout or Bearish Breakdown? AVGO’s $300.2 Price Tag Demands Precision
Broadcom’s 2.74% intraday drop reflects a critical juncture in the AI-driven semiconductor sector. While Nvidia’s AI optimism fuels long-term demand, near-term regulatory risks and slowing growth signals have triggered profit-taking. The stock’s support at $293.66 and resistance at $300.2 will be pivotal: a break below $299.86 could accelerate a test of the 200D MA, while a rebound above $307.01 (intraday high) may reignite bullish momentum. Sector leader Intel (INTC) down -0.42% highlights the sector’s fragility. Investors should monitor China’s AI chip policies and Broadcom’s Q3 earnings on September 4. Watch for $295 breakdown or $300.2 retest to gauge the next move.