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Sell-offs for artificial intelligence (AI) stocks are continuing in Thursday's trading, and the trend is hitting Broadcom's valuation.
Investors are reacting to news that the government shutdown will result in the publication of less macroeconomic data.
Lack of visibility on inflation could make the Federal Reserve less likely to deliver the interest rate cut investors are hoping for.
Broadcom (NASDAQ: AVGO) stock is seeing another substantial pullback amid the backdrop of a broader trend for valuations in the artificial intelligence (AI) space. The company's share price was down 5.5% as of noon ET Thursday. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) had fallen 1.2%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was off 1.8%.
Investors are continuing to move out of AI stocks in response to valuation concerns, and Broadcom is among the big names in the category getting hit with sell-offs. Despite the pullback, the connectivity-chip leader's stock is still up 44.5% in 2025 as of this writing.
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In addition to bearish momentum shaping valuation for AI companies, investors are also responding to potential adverse impacts stemming from the U.S. government shutdown. While President Donald Trump signed a funding bill yesterday that brought an end to the shutdown, there are signs that there could be lingering effects that will have big impacts on the market.
Due to the government shutdown, reports tracking key macroeconomic metrics and indicators were not prepared -- and it now looks like some will not be released at all. According to White House officials and advisors, jobs data for October could soon be released -- but it would not include unemployment data. There's also a bigger risk factor and point of uncertainty for investors.
Due to the government shutdown, it now seems unlikely that investors will receive official inflation data for October. That could make the Federal Reserve's job much harder when it comes to deciding whether to cut interest rates at its meeting in December -- or encourage the central banking authority to hold off on issuing a cut.
Broadcom's leadership position in connectivity chips for AI appears unlikely to be shaken any time soon, but macroeconomic dynamics will continue to play a big role in its valuation trends. Along with recent concerns about a bubble in the AI space, uncertainty on the interest rate front could drive more volatility in the near term.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
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| Nov-12 |
Wall Street drops toward its worst day in a month as AI superstars keep weakening
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