Semiconductor ETFs Rally Following Strong Broadcom Earnings

Shares of Broadcom Inc. (AVGO) surged on Friday following a stellar earnings report, providing a rare boost for the broader semiconductor and tech industry. The Defiance Daily Target 2X Long AVGO ETF (AVGX) jumped 16% midday Friday, riding an 8% gain in Broadcom’s stock.

Other semiconductor exchange-traded funds also got a lift. The VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX)—both of which have a 9% weighting in Broadcom, making it SMH’s third-largest and SOXX’s top holding—were trading notably higher, outperforming the broader market.

Broadcom also carries significant weight in the Invesco QQQ Trust (QQQ), ranking as the fifth-largest holding at just under 4%.

Broadcom Earnings Top Expectations

The stock surge came after Broadcom reported earnings that topped expectations on both revenue and profit, while outlining a bullish outlook for its custom artificial intelligence chip business. 

The company has already partnered with three major tech firms to design AI chips, with the segment projected to generate as much as $60 billion to $90 billion in revenue by fiscal 2027. 

In its earnings call, Broadcom revealed that it is in discussions with two additional companies about potentially designing custom chips, which could add billions more in future revenue.

DeepSeek Selloff

The market reacted favorably. Earlier this year, the release of China’s DeepSeek AI model triggered a sharp selloff in AI stocks, including Broadcom and rival Nvidia Corp. (NVDA), as investors feared that more efficient AI models could reduce demand for computing power. 

At the same time, ongoing U.S.-China tensions and the threat of export restrictions on chips have weighed on Broadcom, Nvidia and other semiconductor names.

However, Broadcom’s strong results helped ease some of these concerns, reinforcing investor confidence in the company’s AI-driven growth potential.