AI-Related Stocks Plummet Amid US Trade Restrictions

AI chip stocks face challenges as new U.S. restrictions impact shares. Major companies TSM, AVGO, and MRVL see declines. Concerns about Microsoft’s data center cuts add to investor worries.

Date: 26-03-2025

AI Rating: 4

Current Market Impact on AI Chip Stocks

Shares of artificial intelligence (AI)-related semiconductor stocks such as Taiwan Semiconductor Manufacturing (TSM), Broadcom (AVGO), and Marvell Technology (MRVL) are experiencing significant price drops due to a combination of factors. The Trump administration has added about 80 companies, including 50 Chinese firms, to the U.S. export 'entity list', which may restrict semiconductor sales and potentially harm revenue efforts of these companies.

Furthermore, analysts have pointed out that Microsoft has canceled substantial data center projects totaling around 2 gigawatts (GW). This could lead to fears of a slowdown in AI infrastructure growth, negatively impacting the outlook for semiconductor firms catering to data centers.

Revenue Dependencies

Both Broadcom and Marvell rely heavily on sales to China, with Broadcom noting that approximately 20% of its revenue comes from this market and Marvell indicates an even higher dependency at 43%. These revenue figures suggest that any restrictions on sales to these companies could adversely affect their financial performance. If the restrictions lead to reduced sales growth, Broadcom and Marvell’s profitability could suffer, which might subsequently be reflected in lowered stock prices.

Despite the immediate negative implications, the report ultimately suggests that the sell-off might be overblown as demand for AI computing remains strong long-term, especially given discounted valuations. Investors might want to consider long-term opportunities in beaten-down AI stocks.

Stocks: TSM AVGO MRVL