AI theme stocks slump as Broadcom plunges 11%… Nasdaq down 1.7% [New York Market Briefing]

The three major U.S. stock indexes closed lower together. Investors' appetite for tech stocks weakened after U.S. AI semiconductor company Broadcom expressed a skeptical outlook on the AI industry.

On the 12th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 48,458.05, down 245.96 points (0.51%) from the previous session. The S&P 500 fell 73.59 points (1.07%) to 6,827.41, and the tech-heavy Nasdaq Composite plunged 398.69 points (1.69%) to 23,195.17.

Behind this decline was Broadcom's 'candid' outlook on the AI industry. CEO Hock Tan said at an earnings presentation the previous day, "The quarterly non-AI revenue outlook is unchanged from the same period last year," but added that "rapidly growing AI revenue has smaller total margins than non-AI revenue." He expressed caution about the profitability of the AI industry. The company also deferred releasing its fiscal 2026 AI revenue forecast.

Broadcom's stance turned expectations for the AI industry into disappointment, triggering a selloff in AI-themed stocks. Broadcom plunged 11.43% that day, and AI leaders Nvidia fell 3.27% alongside AMD down 4.81%, Micron down 6.70%, and Palantir down 2.12%. Oracle also fell 4.47% that day. Alphabet, Microsoft (MS) and Meta closed down in the 1% range. By contrast, Tesla and Apple rose 2.70% and 0.09%, respectively.

Jed Ellerbrock, a portfolio manager at Argent Capital Management, said, "Today was a day when value stocks outperformed growth stocks," adding, "Investors are not completely pessimistic about AI but are cautious, uneasy, and hesitant."

According to the CME FedWatch Tool, federal funds futures reflect a 43.5% probability of a 25bp rate cut by April next year and a 39.0% probability of rates remaining unchanged. The CBOE Volatility Index (VIX) rose 0.89 points (5.99%) from the previous close to 15.74.

Minsung Hong, Hankyung.com reporter mshong@hankyung.com