Why Broadcom Stock Is Plummeting Today

Shares of the semiconductor company Broadcom (NASDAQ: AVGO) were falling hard today as the broader market turned red once again. Investors are still trying to figure out what to do amid President Donald Trump's chaotic rollout, and subsequent rollback, of some import tariffs.

Semiconductor stocks, including Broadcom's, are also likely reeling as investors process the news that China and the U.S. are in a full-blown trade war. A significant percentage of Broadcom's revenue came from China last year.

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As a result, Broadcom's stock is down 7% as of 11:37 a.m. ET.

Tariff threats are still real

While investors were very happy to see the Trump administration lower tariffs to 10% for most countries yesterday, they're still understandably jittery about the future. Specifically for Broadcom, there are still plenty of questions about how tariffs could impact the company.

Broadcom's sales from China totaled $10.5 billion in 2024, accounting for more than 20% of its total revenue. That level of exposure to China is likely unnerving investors as Trump has ratcheted up tariffs on China to effectively 145% as of this morning.

Not all of Broadcom's business in China may be impacted by tariffs, but with the U.S. and China engaged in a trade war, there's fear that tariffs will put pressure on device sales, which in turn could lower sales of Broadcom's processors.

Adding to the turmoil is the fact that Trump said last week that tariffs on semiconductors are coming "very soon." Whatever those unannounced tariffs could have been are likely on pause right now, but since the administration hasn't been clear about its plans, investors are left wondering if semiconductor tariffs could still be announced in the near future.

Hold on tight

Most investors have probably already figured this out by now, but there's likely more volatility ahead for Broadcom and other stocks. It's worth remembering during this time that Broadcom is still a significant player in the artificial intelligence (AI) processor market and its AI sales spiked 220% last year.

Broadcom investors may do better to hold onto their shares right now rather than panic sell. The dust has yet to settle on the U.S. and China trade war and other tariffs, so making a rash decision to sell Broadcom at a time when the AI boom is still in full swing may do more harm to your portfolio than good.

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.