After 11% Wipeout, XSD Investors Felt the Shockwave From Broadcom’s AI Guidance

XSD investors got a jolt last week when the SPDR S&P Semiconductor ETF, an equal-weight-style basket of semiconductor stocks, posted its worst single session in years. 24/7 Wall St. reported that an investor holding $10,000 in XSD at Thursday’s close would have seen that position fall to roughly $8,873 by Friday’s close, after the fund dropped 11.27% on June 5, 2026 (from $644.32 to $571.68). The same selloff day was also marked by steep declines in major “AI trade” names, with Broadcom and Marvell both falling on the day.

Broadcom’s share move was the part investors immediately tied to the AI narrative. 24/7 Wall St. said Broadcom closed Friday down 7.92%, at $385.73, after market digestion of its third-quarter AI outlook, and it characterized the reaction as driven by guidance that “disappointed AI bulls.” In Broadcom’s own June 3 results release, the company said it expected third-quarter semiconductor revenue from AI to grow over 200% year over year to $16.0 billion, following a second-quarter quarter in which it reported AI semiconductor revenue of $10.8 billion, up 143% year over year.

What makes the ETF move feel outsized is the structure of XSD itself. The fund tracks a modified equal-weight index designed to spread exposure across many semiconductor names rather than letting the biggest market-cap companies dominate returns. State Street’s XSD factsheet describes the strategy as a modified equal-weight approach and lists 44 holdings, with top positions around the 3% range. In that setup, Broadcom’s absence from XSD’s top-10 weights matters less than the broader “everyone sold everything” dynamic that can unfold across a basket when one high-profile AI component misses expectations and pulls down sentiment across the group, 24/7 Wall St. argued.

Broadcom’s guidance did arrive alongside strong headline numbers. In its June 3 release, the company said it delivered record results in Q2, including consolidated revenue of $22.2 billion (up 48% year over year) and adjusted EBITDA of $15.2 billion (69% of revenue). Those figures were paired with a much bigger AI semiconductor growth backdrop, with Broadcom stating that Q2 semiconductor revenue from AI rose to $10.8 billion. Still, investors focused on what the company was willing to promise for Q3, not just what it reported for Q2, and that difference is where 24/7 Wall St. placed the trigger for the ETF’s larger-than-expected drawdown.

The selloff also landed in a market that has been tracking mega-scale customer commitments for custom AI hardware and networking, which Broadcom has increasingly framed as “gigawatt-scale” demand. In an April 6 Form 8-K, Broadcom disclosed that Anthropic, beginning in 2027, will access approximately 3.5 gigawatts of TPU-based compute capacity through Broadcom as part of Anthropic’s next-generation commitments. In April 14, Broadcom also highlighted a multi-year partnership with Meta to support MTIA (Meta Training and Inference Accelerator) chips, noting an initial MTIA deployment of more than 1 gigawatt with plans to ramp to multiple gigawatts over time. And in an October 2025 collaboration announcement, Broadcom and OpenAI described a broader effort to deploy 10 gigawatts of OpenAI-designed AI accelerators and related rack systems, with deployment targeted to start in the second half of 2026 and be completed by end of 2029.

Even with those customer timelines on the public record, it is still not clear that Broadcom’s guidance alone explains the full magnitude of XSD’s move. 24/7 Wall St. itself acknowledged that Broadcom was not a top-10 XSD holding in the fund’s most recent published weights, meaning the ETF’s structure can amplify sector-wide selling rather than simply concentrating losses in a single issuer. Also, the article cited a specific “whisper number” for AI guidance, but that figure is not provided in Broadcom’s June 3 earnings release, so readers should treat the comparison as an interpretation of Street expectations rather than a directly disclosed Broadcom metric.

Looking ahead, the near-term question for the semiconductor complex is whether the June 5 downdraft was primarily positioning and expectations management, or a clearer sign that AI compute order growth is losing momentum. 24/7 Wall St. pointed to Micron’s June 24 earnings as a potential test. If memory and related supply-chain commentary comes in soft, the “AI compute orders” narrative will face more scrutiny. If it comes in strong or stable, it could shift the market’s interpretation of June 5 toward a temporary recalibration. Investors will likely watch both guidance language and how broadly the selling extended beyond the names most directly tied to custom AI silicon and networking.