Broadcom Inc ( AVGO ) shares are dropping on Thursday as a sector‑wide sell‑off triggered by Nvidia Corp’s post‑earnings decline weighs on chip stocks.

Broadcom ( AVGO ) shares are sliding. Why is AVGO stock falling?

Sector Pressure Following Nvidia's Sell‑Off

The weakness in Broadcom ( AVGO ) is likely being driven by a broader pullback across the semiconductor sector. Nvidia ( NVDA ) delivered another strong quarter, beating expectations and issuing upbeat guidance, but its stock still fell as investors questioned whether AI‑driven valuations have become overheated, dragging down chip names like Broadcom ( AVGO ) with it.

Broadcom’s Breakthrough Chip Technology

Despite the weakness on Thursday, Broadcom ( AVGO ) announced its new 2nm SoC is built using its 3.5D XDSiP platform, which blends 2.5D packaging techniques with Face‑to‑Face 3D‑IC integration. This architecture allows compute, memory and network I/O to scale independently within a compact footprint, enabling higher efficiency, lower power consumption and the ultra‑high signal density needed for massive AI workloads.

The company says this technology is foundational for next‑generation XPUs and is designed to meet the demands of gigawatt‑scale AI clusters.

Frank Ostojic, Broadcom's ( AVGO ) senior vice president and general manager of its ASIC Products Division, noted that Broadcom ( AVGO ) has expanded the platform's capabilities since its introduction in 2024 and expects broader customer shipments beginning in the second half of 2026.

Fujitsu will be the first customer to receive the new chip. The company described Broadcom's ( AVGO ) 3.5D XDSiP technology as a transformative step in semiconductor integration, combining 2nm process innovation with Face‑to‑Face 3D stacking to unlock unprecedented compute density and energy efficiency — key ingredients for the next generation of AI and high‑performance computing systems.

Growing Interest From Hyperscalers

Broadcom's ( AVGO ) approach stacks two chip dies top‑to‑top, rather than the top‑to‑bottom method used in earlier designs from competitors like Advanced Micro Devices Inc ( AMD ) , according to Bloomberg. This configuration allows for faster data transfer and improved power efficiency.

All of Broadcom's ( AVGO ) existing hyperscaler customers have adopted this technology for their next‑generation designs, with several projects already underway beyond the Fujitsu partnership. The company has been working closely with Taiwan Semiconductor Manufacturing Co ( TSM ) for about five years to refine this approach, positioning Broadcom ( AVGO ) as a growing rival to Nvidia ( NVDA ) in the AI chip market.

AVGO Price Action: Broadcom ( AVGO ) shares were down 4.94% at $315.90 at the time of publication on Thursday, according to Benzinga Pro.

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