Broadcom Shares Slide as Nvidia’s Woes Drag Semiconductor Stocks Lower: Retail Bets on Strong Earnings

Broadcom’s shares fell as much as 4% in mid-day trading Tuesday, extending losses in the broader semiconductor sector. 

The decline comes despite Citigroup raising its price target on the stock from $175 to $205, maintaining a ‘Buy’ rating ahead of Broadcom’s upcoming earnings report on Thursday.

The semiconductor sector faced pressure as Nvidia shares dropped another 1.85%, extending losses for a fourth straight session. The slump follows a 2.6% decline on Monday after Chinese regulators launched an antitrust probe into Nvidia for alleged violations of competition law.

While the immediate impact of a potential sales ban in China may be limited, according to analyst Ming-Chi Kuo from TF International Securities, Nvidia's troubles have reverberated across the industry. 

Despite the pressure, Broadcom announced Tuesday the launch of a commercial version of Bitnami, a popular catalog of open-source software. The company has partnered with Arrow Electronics as the global distributor, responsible for managing purchases and user support.

Citigroup analysts expect Broadcom to beat earnings expectations, driven by a recovery in its non-AI semiconductor business and improved gross margins due to a higher software mix. 

However, they caution that guidance for Q1 2024 may reflect slowing AI-related orders from Google, even as demand from Meta is projected to grow throughout 2025.

Despite the general bearishness in the semiconductor industry, retail sentiment around Broadcom improved to ‘bullish’ (71/100) from ‘neutral’ with sustained ‘high’ message volumes as retail investors on Stockwits anticipate strong earnings on Thursday.

Nvidia’s ongoing regulatory struggles weighed on other semiconductor stocks as well. 

Taiwan Semiconductor Manufacturing Company (TSMC) dropped more than 3% despite reporting a 34% year-over-year increase in revenue. Micron Technology tumbled over 3%, even after receiving a $6 billion subsidy, while Atomera slid more than 6%.

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