Reasons to Consider Buying Amid the Recent AI Trade Sell-Off

Key Points

• Four leading U.S. cloud companies are expected to spend approximately $700 billion on AI infrastructure in 2026.

• Nvidia reported record revenue of $81.6 billion for its fiscal first quarter, a year-over-year increase of 85%.

• Broadcom also posted record revenue of $22.2 billion for its fiscal second quarter, a growth of 48% year-over-year.

The major indexes experienced a significant drop last week, particularly the Nasdaq Composite, which fell 4.2% on Friday, the steepest single-day decline since early 2025. This sell-off, heavily impacting chip stocks, resulted in a loss of $1.3 trillion in value for U.S.-traded chipmakers. The decline was attributed to Broadcom’s failure to raise its outlook for AI chips and economic concerns stemming from a strong jobs report that could drive interest rates higher.

Despite last week’s downturn, companies in the AI sector remain robust. Nvidia’s data center business grew by 92%, and Broadcom’s AI chip revenue skyrocketed by 143%, highlighting strong demand. The pullback in stock values has made valuations more reasonable, although risks remain due to potential decreases in AI spending and external economic pressures.