Broadcom shares plunge 3.21% amid profit-taking selloff in tech stocks

Broadcom shares plunged 3.2082% in pre-market trading on Jan. 9, 2026, as part of a broad selloff in technology stocks amid profit-taking following a recent rally. The decline aligned with a sector-wide rotation out of high-growth tech names, with the Nasdaq posting its steepest losses among major indices. Investors shifted capital toward defense and industrial sectors, buoyed by President Trump’s proposed $1.5 trillion 2027 defense budget, which lifted aerospace contractors like Northrop Grumman and Lockheed Martin.

Despite the drop, analysts have maintained a constructive outlook. Truist Securities and UBS both raised price targets for Broadcom in recent weeks, with Truist lifting its target to $510 and UBS to $475, citing the stock’s strong AI semiconductor backlog and long-term growth potential. The recent sell-off follows a 20% pullback after the company’s earnings report, which lacked a full-year AI revenue forecast, sparking short-term concerns. However, analysts argue the decline reflects overreaction rather than fundamental weakness.

Broadcom’s stock has fallen 4.4% year-to-date, trading 19.5% below its 52-week high. While near-term margin pressures from lower-margin AI chip sales have raised questions, the company’s fiscal Q1 guidance highlighted robust revenue growth, particularly in AI semiconductors, which surged 74% year-over-year in fiscal Q4. Analysts emphasize that the slight gross margin contraction is a trade-off for scaling high-demand product lines. The stock’s volatility—marked by 23 moves of over 5% in the past year—underscores its sensitivity to macroeconomic shifts and sector rotations.

The company’s stock price movement reflects the broader dynamics of the tech sector and its exposure to AI-driven demand. Despite recent declines, the stock has shown resilience in the face of macroeconomic headwinds and market rotation. Investors remain divided between short-term volatility and long-term growth potential, particularly with AI and semiconductor demand continuing to outpace broader industry trends.

Looking ahead, the stock’s path will likely depend on the clarity of AI revenue guidance and broader sector momentum. While the recent earnings report left some questions unanswered, the long-term fundamentals remain intact. Analysts at Truist and UBS continue to see value in the stock’s long-term trajectory, despite the near-term volatility.

The market reaction to Broadcom’s earnings report and AI guidance has been largely emotional, with the stock experiencing exaggerated swings in response to mixed messages. While this pattern is common in high-growth tech stocks, it does not align with any of the predefined backtesting strategies or signals. Nonetheless, investors should remain vigilant about the stock’s volatility and sector dynamics as they evolve.