Key insights
- FormFactor stock declined due to a broad semiconductor selloff triggered by Broadcom's disappointing AI sales forecast. This sector-specific weakness was amplified by stronger-than-expected US non-farm payrolls, increasing speculation of a Fed rate hike and pushing bond yields higher. The combination of macro headwinds and sector contagion negatively impacted high-multiple growth stocks like FormFactor, despite a recent analyst upgrade.
Investing.com -- FormFactor stock slid 6.0% in mid-day trading today, hitting $119.02, as a broad semiconductor selloff that began the prior session extended into a second day, sweeping up chip-adjacent names including FormFactor. The rout was set in motion after Broadcom shed more than 12% in heavy turnover on Thursday, following a fiscal second-quarter report that missed on revenue and left investors disappointed. The selloff was driven by what Broadcom’s CEO did not say: the company held its 2026 AI semiconductor sales forecast unchanged, declining to raise the target that investors had expected to grow alongside rapid custom-chip adoption.
On the company-specific side, the news was not uniformly negative for FormFactor. Evercore ISI upgraded the stock to Outperform from In Line on June 4, 2026, assigning a $155 price target based on 38x projected 2028 EPS, and cited AI tailwinds and an expected 41% two-year CAGR in the company’s EPOS business as justification for a higher multiple. However, this bullish catalyst was unable to offset the sector-wide tide. Adding a modest additional headwind, director Sheri Rhodes sold approximately $793,531 worth of FormFactor shares on June 2, 2026, a transaction that reinforced existing valuation concerns for a stock that has surged roughly 293% over the past year.
Broadcom’s disappointing AI chip sales forecast on June 5 triggered a notable decline across the semiconductor sector, with the Philadelphia Semiconductor Index falling over 6% during trading. Compounding the pressure, U.S. non-farm payrolls for May came in well above expectations, rising by 172,000 versus a forecast of 85,000, which increased speculation of a Federal Reserve interest rate hike and sent bond yields higher. That combination of a hawkish macro read and a sector-specific shock proved particularly damaging to high-multiple growth stocks like FormFactor.
The day’s decline reflects a confluence of forces: sector contagion from Broadcom’s guidance disappointment, a macro backdrop that suddenly turned less accommodative, and lingering valuation sensitivity for a stock trading well above historical norms. Investors headed for the exits after a blistering rally that pushed many chip stocks to record highs, and FormFactor — despite its strong Q1 2026 results and a fresh analyst upgrade — was not immune to the broader reset in semiconductor valuations.
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