Broadcom Forecast Triggers AI Chip Sell-Off, Asian Stocks Fall

On Friday Broadcom’s softer-than-expected outlook for AI semiconductors triggered a broad sell-off in Asian technology and chip stocks. MSCI’s index of Asia-Pacific shares outside Japan fell about 1.6%, South Korea’s Kospi dropped more than 6% and Japan’s Nikkei declined roughly 1.3%.

Broadcom reported strong underlying demand but set a more cautious forecast for its AI semiconductor business than many investors expected. Market participants began to lock in gains from this year’s rally in tech and chips and to shift into safer positions ahead of the weekend, prompting rapid de-risking across the semiconductor supply chain.

The decline was steepest in South Korea, a major supplier of memory chips and other components used in AI systems. Charu Chanana, chief investment strategist at Saxo, described the session as ‘quite a risk-off day,’ noting the country’s exposure to the AI memory upswing made it vulnerable when expectations were revised.

US equity futures fell after a mixed Wall Street session, with Nasdaq futures down about 1% and S&P 500 futures off roughly 0.5%. European futures were softer, with EUROSTOXX 50 futures down near 0.2% and DAX futures down about 0.5%; FTSE futures were little changed.

Energy markets were steadier. Brent crude traded near $95 a barrel and was set for a weekly gain of more than 3%, while US crude stood around $92.73 a barrel and was on track to rise over 6% for the week. Traders cited uncertainty around US-Iran negotiations and the outlook for shipping through the Strait of Hormuz. Kristian Kerr, head of macro strategy at LPL Financial, warned that any initial improvement in supply is likely to come from crude already produced, including stranded or floating cargoes and storage, and that restoring shipping to pre-conflict levels could be difficult.

Trading volumes rose as investors rebalanced portfolios. Market participants said they will watch upcoming corporate reports and any progress in diplomatic talks for signs of whether sentiment can stabilise in the near term.