Artificial intelligence related stocks fell sharply on Friday amid separate concerns about a group of the largest companies in the space, including Broadcom (AVGO) and Oracle (ORCL).
Broadcom shares fell nearly 11% after the company expressed some concerns about margins related to AI.
“We expect Q1 consolidated gross margin to be down approximately 100 basis points sequentially, primarily reflecting a higher mix of AI revenue,” Broadcom CFO Kirsten Spears said. “As a reminder, consolidated gross margins through the year will be impacted by the revenue mix of Infrastructure Software and Semiconductors and also product mix within Semiconductors.”
Despite that, Broadcom received substantial praise from Wall Street firms after its latest results and guidance, with several raising their price targets.
“Overall, these are very good results, showing near term upside to overall [numbers] for the first time in a while,” Morgan Stanley analyst Joseph Moore wrote in a note to clients. “Every quarter in CY25 has driven longer term expectations higher, as they have expanded from 3 customers to 5, given optimistic [serviceable addressable market] targets for CY27, amid positive reports on TPU v7; AI revenues have been above our estimates, mostly offset by weaker non AI semis. This quarter showed more of a short term inflection as well, guiding overall revenues and EPS further above our estimates than we had seen previously, and guiding AI 20% above our estimates for the January quarter.”
Moore has an Overweight rating on Broadcom and upped his price target to $462 from $443 after the results.
Broadcom’s slide hit the shares of other semiconductor makers tied to the AI space, including Nvidia (NVDA), AMD (AMD), Micron (MU), Intel (INTC), Taiwan Semiconductor (TSM) and others, all of which saw declines of 2% or more.
Oracle (ORCL) shares fell more than 6% after it was reported that the IT giant had delayed some data centers for OpenAI (OPENAI) to 2028 from 2027. The delays are largely due to labor and material shortages, Bloomberg reported, citing people familiar with the matter.
Oracle declined to comment, while OpenAI did not immediately respond to a request for comment from Seeking Alpha.
Other stocks tied to the space, such as Celestica (CLS), Credo Technology (CRDO), Astera Labs (ALAB) all fell 7% or more on Friday.