What Happened?
Shares of fabless chip and software maker Broadcom (NASDAQ: AVGO) jumped 2.1% in the afternoon session after the company announced plans to expand its strategic partnership with NEC Corporation to drive modern private cloud adoption. Under the agreement, the two companies planned to use Broadcom's VMware Cloud Foundation (VCF) to help customers modernize their own private cloud systems. NEC intended to leverage the skills and expertise gained from implementing VCF in its own IT systems to assist other clients. The collaboration aimed to help customers ensure security and accelerate innovation.
After the initial pop the shares cooled down to $347.80, up 2.1% from previous close.
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What Is The Market Telling Us
Broadcom’s shares are very volatile and have had 26 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 5% on the news that markets continued to retreat, as investors re-evaluated the high valuations of stocks that benefited from the artificial intelligence boom.
After a fantastic run, many of those high-flying AI and technology stocks saw investors take profits: selling shares to lock in their gains. This is often called a "market rotation." Money is moving out of the red-hot tech sector (which some worry has become too expensive) and into other parts of the market that investors may currently deem more stable or reasonably-priced. There's a secondary reason for the cautious mood: The long government shutdown came to an end. Though it's typically interpreted as good news, it also means a flood of delayed economic reports will be released. For weeks, investors were "flying blind" without key updates on the economy's health, like inflation data and the jobs report. In typical "sell the news" fashion, investors may also be taking profits and selling in anticipation that the new data would potentially give the Federal Reserve reasons to slow or even pause future rate cuts.
Broadcom is up 49.9% since the beginning of the year, but at $347.80 per share, it is still trading 9.9% below its 52-week high of $385.98 from October 2025. Investors who bought $1,000 worth of Broadcom’s shares 5 years ago would now be looking at an investment worth $9,049.
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