Broadcom shares dropped 5.8% in afternoon trading after Bank of America put a specific figure on the debt behind the chipmaker's AI expansion. The broader market barely moved, pointing to a company-specific reassessment rather than a wider AI selloff.
Broadcom shares fell 5.8% in afternoon trading to $393.49, driven primarily by a fresh Bank of America note on the debt load behind the company's AI chip-financing platform. The rest of the market held steady, which points to a repricing of Broadcom's own balance sheet rather than a broader AI trade unwind.
A $370 billion debt estimate
Bank of America analyst Tom Curcuruto flagged that Broadcom's chip-financing vehicle could reach $370 billion of senior debt by mid-2029 at 20-gigawatt scale, including roughly $150 billion of new issuance in 2027 alone. Per Broadcom's latest 10-Q, an investor partner assumed the purchase and lease agreements, and Broadcom agreed to backstop lease payments for five years. The $370 billion is not Broadcom's own debt, since the vehicle raises capital and leases custom AI accelerators to customers — but the sheer scale of the contingent exposure unnerved markets.
Burry's warning adds to fragile sentiment
The note landed as sentiment was already fragile. Michael Burry disclosed earlier this week that he increased his short position in an AI-adjacent name and warned broadly about an AI bubble. With Broadcom's third-quarter fiscal 2026 earnings release scheduled for early September, institutional investors appear to be re-evaluating risk-reward profiles after the stock's run-up on AI momentum. Concern also centers on Broadcom's evolving product mix, as the rapid shift toward custom AI silicon carries lower gross margins than the company's enterprise software and core networking products.
Broadcom alone in the red
The broader market offered little cover, yet held up far better than Broadcom. The S&P 500 slipped 0.2%, the Dow Jones fell 0.2%, and the Nasdaq declined 0.4% on the session — modest losses next to Broadcom's outsized drop. Intel was down 2% and the iShares Semiconductor ETF fell 0.7%, while a broad semiconductor fund barely moved even as Broadcom fell sharply. Retail sales fell 0.6% in July and consumer sentiment dropped to 51.0 in August, well below the 54.5 economists expected, adding a cautious macro backdrop to the session.
Still, Broadcom carries a 55% EBITDA margin and is forecast to grow revenue by 65.6% in 2026, with analyst price targets averaging $527.88 — and the stock remains up significantly over the past year, suggesting today's drop may reflect a reset in sentiment rather than a crack in the underlying business.
Source: Investing.com
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