AI Sector Sell-Off on December 12, 2025: Broadcom Earnings and Jim Cramer’s Commentary

On December 12, 2025, CNBC’s Mad Money host Jim Cramer discussed a sharp market downturn concentrated in AI companies [2]. The primary catalyst for the sell-off was Broadcom’s (AVGO) earnings call, where the company reported margin pressure related to AI semiconductor sales and noted that OpenAI’s 2026 orders would be “not much”—despite a $73 billion total AI backlog spanning 18 months [1]. This news triggered broad selling in the AI sector, with large-cap chipmakers leading the decline: AVGO (-11.44%, its worst single-day drop in 10 months), AMD (-4.80%), and NVDA (-3.23%) [0]. AI-focused ETFs like the Global X Robotics & Artificial Intelligence ETF (BOTZ) fell 1.46%, and the NASDAQ Composite declined 1.25% due to the drag from AI/tech stocks [0].

1. Sentiment Shift
   : The sell-off marks a significant shift in AI market sentiment from prioritizing “growth at any cost” to focusing on “profit durability,” as investors reacted to Broadcom’s margin warning [1].
2. Supply Chain Pressure
   : Broadcom’s margin concerns signal potential profitability challenges across the AI chip supply chain, which could impact other semiconductor manufacturers [1].
3. Dual Demand Signals
   : While near-term investor expectations were reset due to OpenAI’s reduced orders, Broadcom’s $73B backlog confirms strong long-term demand for AI infrastructure [1].

• Margin Compression
  : Broadcom’s warning indicates potential profitability pressures in AI chip production [1].
• Customer Concentration
  : Dependence on major AI customers (like OpenAI) increases vulnerability to order fluctuations [1].
• Regulatory Uncertainty
  : Ongoing US-China tensions and AI chip export policies could disrupt sales for companies like NVDA [0].
• Valuation Vulnerability
  : AI stocks remain highly valued (e.g., AMD P/E = 110.95) and susceptible to profit-taking [0].

The $73B AI backlog and strong long-term demand projections suggest sustained growth potential for AI infrastructure companies once margin concerns are addressed [1].

On December 12, 2025, the AI sector experienced significant selling pressure driven by Broadcom’s earnings commentary. Large-cap chipmakers (AVGO, AMD, NVDA) and AI ETFs (BOTZ) were hardest hit, with the NASDAQ Composite impacted by tech sector weakness. The event highlights a shift in investor focus from pure growth to profitability, alongside conflicting signals of short-term reset and long-term demand strength in the AI market.