Broadcom Inc. (AVGO.US) performance triggers sell-off wave, chip stocks evaporate 1.3 trillion dollars in two days, Philadelphia Semiconductor Index records largest single-day drop since the outbreak of COVID-19 pandemic.

Chip stocks in the US encountered a large-scale sell-off on Friday, as Broadcom Inc.'s (AVGO.US) earnings guidance failed to meet market high expectations and the prospect of interest rates turning hawkish again, causing a collective slump in artificial intelligence (AI) concept stocks, with approximately $1.3 trillion in market value evaporating over two days. The Philadelphia Semiconductor Index (SOX.US), an important indicator of industry performance, plummeted 10.26% on Friday, marking the largest single-day drop since the market panic triggered by the COVID-19 outbreak in March 2020. Combined with Thursday's decline, the index fell by approximately 12% over two days. The sell-off began after Broadcom Inc. released its earnings report this week. Despite Broadcom Inc. surpassing market expectations for the second quarter, the company's outlook for growth in the AI chip business did not meet investors' high expectations. Particularly during the earnings conference call, CEO Hock Tan revealed that a key custom AI chip customer, Alphabet Inc. Class C, may further drive diversification in the supply chain, sparking concerns about Broadcom Inc.'s long-term growth prospects. As a result, Broadcom Inc.'s stock price plummeted by 13% on Thursday, losing approximately $286 billion in market value in a single day, marking the fourth-largest single-day market value decline in US listed companies' history. The company's stock price fell another 7.9% on Friday, with a cumulative drop of nearly 20% over two days. As one of the biggest beneficiaries of the current AI wave, Broadcom Inc.'s pullback quickly spread to the entire semiconductor sector. The world's largest chip manufacturer, NVIDIA Corporation (NVDA.US), fell by about 6% on Friday, leading to a market value decrease of over $300 billion. Micron Technology, Inc. (MU.US), which had been performing strongly recently, plummeted by 13%, losing approximately $150 billion in market value in a single day; Marvell Technology, Inc. (MRVL.US) dropped by nearly 17%; Advanced Micro Devices (AMD.US) and Intel Corporation (INTC.US) both fell by about 11%. Despite experiencing a significant pullback in this round, the Philadelphia Semiconductor Index has still risen by 73% year-to-date, having just set a new all-time high earlier this week. Market expectations for the valuation of AI concept stocks have reached extremely high levels, and any performance that fails to exceed expectations could trigger a significant adjustment. Dennis Dick, a proprietary trader at Triple D Trading, said: "For a long time, investors have almost blindly bought chip stocks on dips, and this strategy has been effective. But today, this situation has ended." In addition to the factors related to Broadcom Inc., the latest US job data has also heightened market nervousness. The data shows that the US added 172,000 non-farm jobs in May, well above market expectations, reinforcing investors' concerns about the Federal Reserve maintaining high interest rates or even raising them again. As a result, the S&P 500 index fell by 2.64% on Friday, with technology growth stocks generally under pressure. Some institutions on Wall Street believe that this round of decline is more of a valuation adjustment than a reversal of the AI industry trend. Ohsung Kwon, Chief Equity Strategist at Wells Fargo & Company, said: "The semiconductor sector was clearly overbought before, so a correction is not surprising. I do not think this means the semiconductor bull market is over." Many analysts point out that the market's growth expectations for companies in the AI industry chain are much higher than in the past. Even if companies achieve strong growth, if they fail to significantly exceed market expectations, their stock prices may still face selling pressure. In fact, as this correction is happening, the market is also digesting another significant event - SpaceX is set to launch an IPO with a valuation of up to $1.75 trillion. Some investors are concerned that as SpaceX and other super unicorns prepare to enter the capital market, a large amount of funds may flow out of overvalued tech stocks and into new investment opportunities. However, some institutions remain optimistic about the industry's long-term prospects. While the explosive growth of chip stocks over the past two years may be difficult to sustain long-term, leading companies with technological barriers and core AI competitiveness still have the potential to outperform the market in the future.