AI Infrastructure Selloff Continues into Mid-December 2025
As of December 16, 2025, the selloff in AI-related stocks, particularly those tied to infrastructure buildouts, has persisted following disappointing updates from Broadcom (AVGO) and Oracle (ORCL) last week. Shares of both companies extended declines on Monday (December 15), dragging down broader AI-exposed names amid renewed scrutiny over profitability, margins, and the timeline for returns on massive capital expenditures.
Key Triggers of the Selloff
- Broadcom’s Earnings (Reported December 11):
- Delivered strong results: Revenue up 28% YoY to ~$18 billion (beat estimates), driven by 74% growth in AI chip sales.
- Guidance was upbeat, with AI revenue projected to accelerate.
- However, CEO Hock Tan highlighted narrowing gross margins due to a higher mix of lower-margin custom AI processors (ASICs).
- Result: Shares plunged ~11% on Friday (December 12), their worst day in months, and fell another ~5% on Monday, trading ~17% below recent highs (around $360-320 range in recent reports).
- Oracle’s Outlook and Reports:
- Fiscal Q2 results (December 10) showed strong AI/cloud demand but missed revenue expectations slightly.
- Raised FY2026 capex guidance by $15 billion (to ~$50 billion total), fueling debt and spending concerns.
- Additional pressure from a Bloomberg report on delays in OpenAI-linked data center completions (pushed to 2028 in some cases).
- Shares dropped ~11-13% post-earnings, another ~4-5% on Friday, and ~2-4% on Monday, now down significantly from September peaks (trading around $188-190).
Broader Market Impact
- The selloff spilled over to other AI infrastructure players: Nvidia (~3% drops), AMD, Micron, CoreWeave (down sharply), and hyperscalers.
- Nasdaq fell ~1.7% on Friday (December 12), marking a multi-day tech-led decline.
- Themes dominating sentiment: “AI angst” over whether explosive spending (hundreds of billions across Big Tech) will yield sustainable high margins, or if custom silicon and capex ramps signal compression and delayed payoffs.
Analyst and Investor Views
- Many remain bullish long-term: Demand for AI compute remains “insatiable,” with Broadcom securing massive deals (e.g., $21B from Anthropic/Google) and Oracle’s backlog growing.
- But short-term caution prevails: Investors are demanding clearer evidence of monetization amid high valuations. Some analysts raised price targets on Broadcom despite the drop, calling it a buying opportunity.
- Broader context: 2025 has seen AI capex soar (estimates $400B+ globally), but recent events highlight risks of overinvestment or “bubble” dynamics if returns lag.
This pullback reflects a shift from pure growth enthusiasm to profitability scrutiny in the AI trade. While fundamentals show robust demand, volatility may continue until clearer ROI timelines emerge in early 2026 reports.