Weekly Market Wrap: Broadcom kept the AI boom alive — but oil and iron ore hit the ASX

Broadcom gave the AI trade a powerful new reason to run this week. Its AI-chip revenue more than tripled to US$16.7 billion in the latest quarter, and the company lifted its fiscal-2027 revenue target for the division to US$115 billion.

That is a striking number. Broadcom is becoming one of the clearest beneficiaries of Big Tech’s shift towards custom AI chips, alongside Nvidia’s dominant position in advanced processors. Foxconn added another signal from the supply chain, reporting record August revenue and saying third-quarter performance should exceed expectations as AI-server demand accelerates.

Yet Australian investors had a much rougher week. The ASX 200 fell about 0.6%, dragged lower by a near-5% fall in materials and an equally sharp retreat in technology. BHP and  Rio Tinto came under pressure as iron ore weakened, while local technology names remained volatile after reporting season.

Oil made the split even harder to read. Brent crude rose 7.6% to US$96.28 a barrel as US-Iran tensions intensified around the Strait of Hormuz, but higher crude failed to give Australian energy shares a clean lift. Woodside, Santos and Ampol all struggled as investors focused on the broader threat that another energy shock could revive inflation and force central banks to stay restrictive.

For Australian traders, this was a week of competing market stories: AI capital spending remains enormous, China-linked miners are losing momentum, and oil is again threatening to upset the inflation outlook.

Nvidia remains the dominant supplier of the most advanced AI chips. Broadcom, however, is helping large cloud companies design custom processors for their own data centres. Its latest numbers suggest that spending on AI infrastructure is still expanding across multiple parts of the supply chain: chips, networking, servers, memory and cloud capacity.

The company expects AI-chip revenue to roughly double again in fiscal 2028, to around US$230 billion. That is a large claim, but it also gives investors a clear measure of how aggressively the biggest technology companies are still investing.

Foxconn offered a useful cross-check. The Taiwanese manufacturer, which builds AI servers for Nvidia and other customers, said August revenue reached a record T$921.8 billion and was almost 52% higher than a year earlier. It expects the September quarter to beat market expectations.

Together, those updates helped semiconductor shares recover after a difficult period. The Philadelphia Semiconductor Index had lost almost one-quarter of its value since late June before the latest rebound.

The message for traders is that AI demand has not disappeared. The harder question is whether the market can sustain that spending if higher oil prices, elevated bond yields and more expensive financing begin to affect the rest of the economy.

The ASX’s weak week was not simply a reaction to Wall Street. It reflected a more specific split between the sectors that dominate the local market.

Materials fell about 5% for the week as iron ore weakness pressured BHP and Rio Tinto. That matters because the two miners remain among the ASX 200’s largest companies and because China-linked demand remains central to Australian market sentiment.

Technology also fell around 5%, even with the late rebound in US chip shares. WiseTech recovered late in the week, but the stock remains under scrutiny after its recent result prompted several analysts to reassess their expectations. The wider message from reporting season has been clear: investors are still willing to reward earnings upgrades, but they have little patience for slower growth or cautious guidance.

Energy was equally revealing. Brent rose above US$96, yet Woodside, Santos and Ampol did not deliver the straightforward gains that might normally follow such a move in crude. The market is weighing the benefit of higher prices against the risk that a prolonged oil shock damages global growth, lifts borrowing costs and reduces consumer spending.

That makes this a more selective ASX environment. Oil, iron ore and AI infrastructure are all producing large moves, though they are pulling Australian sectors in very different directions.

Oil was the week’s clearest macro trade. Brent rose 7.6%, while West Texas Intermediate gained almost 10%, after fresh military exchanges between US and Iranian forces increased concern over Middle East exports and shipping routes.

The impact is spreading beyond energy markets. Higher oil prices have pushed US diesel prices to record highs, adding pressure to transport, agriculture and industrial costs. That matters just as investors are trying to determine whether the Fed can afford to raise rates again.

August US payrolls added 162,000 jobs, far above forecasts near 56,000. The report lifted expectations of a September rate hike, while gold fell 1.1% for the week as investors moved towards the US dollar and higher-yielding assets.

Next week’s US inflation reports are now the deciding event. A softer result could calm rate fears and support growth shares. A stronger result, combined with Brent remaining near US$100, would make the inflation story much harder for markets to ignore.

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US Tech 100: Can Broadcom broaden the AI rally?

Broadcom’s results have given technology investors another proof point on AI spending, while Foxconn’s record sales show that demand is flowing into the server supply chain.

Oracle’s earnings will offer the next major test. Strong cloud and AI-demand numbers could support another move higher in the US Tech 100. Cautious capital-spending guidance, or a renewed rise in Treasury yields, could quickly shift attention back to the sector’s valuations.

ASX 200: Can miners and local technology stocks find support?

The ASX 200 has slipped from its August record high near 9,297, with BHP, Rio and technology shares weighing on the index. The split across the market is likely to remain pronounced while iron ore, oil and global rate expectations move in opposite directions.

A recovery in miners and a softer US inflation print could help the index stabilise. Further weakness in iron ore, or inflation data that revives concerns around global interest rates, could extend pressure on materials and growth shares.

Brent crude: Is US$100 the next test?

Brent is now within reach of the US$100 level that has defined previous energy shocks. Traders will be watching tanker traffic through the Strait of Hormuz, developments involving Iranian exports, and any sign that military escalation is affecting physical supply.

Further disruption could drive another sharp move higher. Improved shipping flows or credible diplomatic progress could unwind part of the risk premium just as quickly.

The week ahead will show whether AI spending can keep carrying technology shares while oil adds pressure to inflation expectations. Broadcom and Foxconn have strengthened the growth story. The CPI report and Strait of Hormuz headlines will determine whether markets can keep focusing on it.

This week showed why a single market view is rarely enough. Broadcom and Foxconn reinforced the AI spending story, BHP and Rio faced renewed pressure from iron ore, and rising oil prices created a new test for inflation-sensitive assets.

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