Why Broadcom Stock Is Sinking Today

Broadcom (NASDAQ: AVGO) stock is losing ground today. The company's share price was down 5.8% as of 2:30 p.m. ET. Meanwhile, the S&P 500 index was down 2% at the same point in the day's trading, and the Nasdaq Composite index was down 2%.

Artificial intelligence (AI) and semiconductor stocks are getting hit with big valuation pullbacks today as traders are having a bearish reaction to otherwise solid fourth-quarter results from Marvell Technology. Like Marvell, Broadcom is a player in the connectivity-chips space -- and investors are selling out of both stocks as investors become more cautious about the stock market's near-term outlook.

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Reaction to Marvell's Q4 report is driving bearish momentum for other AI stocks

Marvell published its fourth-quarter results yesterday, and performance came in broadly better than Wall Street's expectations. The business notched non-GAAP (adjusted) earnings per share of $0.60 on revenue of $1.82 billion. For comparison, the average Wall Street analyst forecast had estimated that Marvell would report per-share earnings of $0.59 on revenue of $1.8 billion for the quarter.

Strikingly, Marvell's forward guidance also beat the average Wall Street estimates -- with its midpoint target for revenue of $1.875 billion exceeding the average analyst estimate's forecast for sales of $1.87 billion in the period. Marvell's stock is down 18.9% as of 2:30 p.m. ET in Thursday's trading, and the bearish reaction to the company's earnings report is extending to Broadcom and other AI stocks.

What's next for Broadcom?

Big sell-offs for Marvell stock despite a mostly strong Q4 report highlight the potential for Broadcom stock to continue to see high levels of volatility in the near term. Macroeconomic and geopolitical risk factors have seemingly raised the stakes when it comes to business performance for growth-dependent AI stocks, and that suggests that Broadcom's share price could continue to see big swings.

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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.