Semiconductor stocks slid broadly on Friday after Broadcom Inc.’s (NASDAQ:AVGO) cautious profitability outlook punctured confidence in the AI-fueled chip rally.
Nvidia Corp. (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), Marvell Technology, Inc. (NASDAQ:MRVL), Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM), Micron Technology Inc. (NASDAQ:MU), Intel Corp. (NASDAQ:INTC), Arm Holdings plc (NASDAQ:ARM) traded lower on Friday.
Broadcom beat fourth-quarter estimates with $18.02 billion in revenue and a 74% jump in AI sales, but its stock fell over 4% after hours as investors reacted to weaker profitability guidance.
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Management warned that fiscal first-quarter gross margins will drop about 100 basis points because lower-margin AI hardware now makes up a larger share of revenue.
CFO Kirsten Spears further unsettled the market by projecting the adjusted tax rate will rise from 14% to roughly 16.5% in 2026 due to global minimum tax rules and shifts in where the company earns income.
AI Strength Fails To Offset Broader Concerns
Despite CEO Hock Tan highlighting a $73 billion AI backlog and expanding custom-silicon demand, Broadcom said non-AI semiconductor revenue will stay flat in the first quarter.
The company also raised its quarterly dividend by 10%, but margin pressure and the 2026 tax hit overshadowed its record AI performance.
China Weighs Massive Chip Incentive Push
Adding to the global backdrop, China is considering a new round of semiconductor incentives that could reach as much as $70 billion, according to Bloomberg on Friday.
Officials are weighing subsidies and financing totaling 200–500 billion yuan, though the final size and list of beneficiaries remain under discussion.
The proposed package would rival the scale of the U.S. Chips Act and underscores Beijing’s push to reduce reliance on foreign suppliers such as Nvidia while strengthening domestic champions, including Huawei and Cambricon.
At the upper end, it would mark China’s largest-ever semiconductor incentive program and would operate separately from the existing $50 billion Big Fund III.
The initiative aligns with President Xi Jinping’s “whole-nation” strategy to secure domestic chip production as U.S. export controls tighten.
Price Action: Nvidia shares were down 0.14% at $180.68 during premarket trading on Friday, according to Benzinga Pro data. AVGO was down 5.83%.
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