Why Broadcom Stock Fell 16% in June
Shares of chip design giant Broadcom (NASDAQ: AVGO) slumped 16% in June 2022, according to data from S&P Global Market Intelligence. Semiconductor stocks in particular have been blasted as worries mount about a possible recession. But Broadcom is a stalwart among chip companies and is outperforming many of its peers. As of this writing, its stock is down 28% so far in 2022. By comparison, the S&P 500 and Nasdaq Composite indexes are down a respective 20% and 29%.
A myriad of factors are weighing on Broadcom and friends. The U.S. Federal Reserve is hiking interest rates in an attempt to beat back inflation, and higher rates put downward pressure on stocks. Reports are also mounting that there's an excess of consumer electronics on the market right now after two years of heavy spending on stay-at-home and work-from-home devices. Micron Technology was the latest to confirm this with weak financial guidance for the summer quarter. Since Broadcom is a top supplier of consumer electronic circuitry, Micron's guidance could indicate Broadcom is in for some turbulence as well.
Additionally, Broadcom also announced at the end of May it is going to attempt to acquire cloud computing infrastructure company VMware for a whopping $61 billion -- which would be among the biggest takeovers ever in the tech world. Adding VMWare to its arsenal of chips and enterprise software would seriously augment Broadcom's already sprawling operation, but the amount of effort involved in pulling off the acquisition was a likely additional reason for the stock's decline last month.
Source Fool.com
