Broadcom sign photographed by the side of the road

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The blistering run-up in the market’s chipmakers sputtered on Thursday, with the gains derailed by a lackluster earnings report from AI darling Broadcom.

Companies supplying the hardware underpinning the AI trade took a beating on Thursday as earnings disappointment triggered a wave of selling in the sector.

The declines hit pause on the red-hot rally in chips and memory stocks in recent week, with the sector rising to new records on a string of earnings beats and unrelenting enthusiasm for AI.

“Chip stocks finally hit a speed bump early today, and much of Wall Street pressed the brakes on its extended rally,” Joe Mazzola, a head trading & derivatives strateigst at Charles Schwab, wrote of the sell-off on Thursday.

Broadcom led the losses in the sector. The Nvidia partner dropped as much as 16% after it missed on revenue for the second quarter.

Here were the most notable moves in the sector:

Away from the chip trade, shares of CrowdStrike, a cybersecurity firm, tumbled 10%. The firm beat on earnings and lifted its annual revenue target, but results weren’t as strong as some investors were hoping for, adding to the bearish sentiment in tech.

Some forecasters have been warning of a broader correction as some of the froth around earnings season, particularly in the chips sector, gets taken out of the market.

The iShares Semiconductor ETF dropped nearly 4% by Thursday morning, but was still up 88% for the year.

Here’s where US indexes stood around 11:00 am ET on Thursday:

Elsewhere, blue-chip stocks bucked higher. The Dow Jones Industrial Average, which is less exposed to pure-play AI trades, rose 700 points as investors took in news that Israel and Lebanon have agreed to a ceasefire. The conflict between the countries has been a key sticking point in US-Iran negotiations.

Investors are still navigating confusion over how much progress is being made in peace talks. The hope has been that the two sides are close to an agreement that will reopen the Strait of Hormuz, but mixed messages on both sides have left markets moving mostly sideways until a more meaningful development takes place.

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Jennifer Sor

Jennifer Sor is a reporter at Business Insider. She covers financial markets and the economy, with a focus on retail investing, job trends, and the pursuit of wealth. She regularly speaks to famed forecasters and top investors in markets, including Gary Shilling, Nouriel Roubini, and Larry McDonald. Her work has also been featured in outlets such as Forbes, Bloomberg Opinion’s “Money Stuff,” and SiriusXM Business Radio. Prior to her time at BI, Jennifer covered tech and business news at the San Francisco Chronicle and Los Angeles Business Journal. She graduated from the University of California, Santa Barbara with a bachelor’s degree in economics and English.Have an interesting story to share? Please reach out to her at jsor@businessinsider.com or @jennreports.81 on the encrypted messaging app Signal. She can also be reached on LinkedIn.Story highlights