The Fault, AVGO, Is in Ourselves — 2026-06-04
Core thesis: AVGO's 15% plunge today reflects not fundamentally bad results, but rather the unwinding of excessive pre-earnings FOMO that had already priced in unrealistic optimism. The stock has merely given back gains from the lead-up to earnings, not broken longer-term support.
Key points:
- AVGO beat EPS ($2.44 vs. $2.40 consensus) but missed on guidance: semiconductor revenue $16B vs. $17.2B consensus—a material shortfall in the AI-spending theme.
- Stock traded $500 pre-market yesterday, dipped to $400 this morning, but 8-day chart shows it's simply erased the pre-earnings rally; 6-month chart shows it remains near 20- and 50-day moving averages.
- Tech sector down ~0.6% (NDX), but S&P 500 up 0.3% by noon ET due to broad sector rotation: Healthcare and Financial Services each +2.5%, with 250+ SPX components advancing and NYSE advancers outpacing decliners 2:1.
- Options traders show only modest volatility bump priced into index options expiring tomorrow ahead of May employment report (consensus: 85K nonfarm payrolls, 4.3% unemployment unchanged).
- IBKR Prediction Markets show traders slightly more optimistic on payrolls ("Above 100K" at 50% "Yes") but aligned with consensus on unemployment.
Takeaway: Today's AVGO selloff is behavioral correction, not fundamental breakdown. Traders chasing AI momentum into earnings faced the classic trap: EPS beat ≠ sufficient condition without guidance strength. Watch tomorrow's employment data for broader market direction; current options pricing suggests complacency.