Soitec’s Post-Broadcom Sell-Off Highlights the Gap Between AI Hype and Hard Numbers

Soitec slides 7.38% after Broadcom's weak AI forecast, amid 34% revenue drop, net loss, and Morgan Stanley stake reduction below 5% threshold.

Soitec shares took another hit on Friday, sliding 7.38% to €147.40 in a session that laid bare the conflicting forces at work in the semiconductor group. The immediate trigger was a disappointing outlook from Broadcom, the US chip giant whose AI-related revenue forecast rattled the entire sector. The iShares Semiconductor ETF fell 5.3% in sympathy, dragging down names such as Intel, Arm and Qualcomm. But for Soitec, the sell-off also reflected a more fundamental reckoning with its own deteriorating financials.

The company’s full-year results for fiscal 2026 painted a grim picture of the core business. Revenue tumbled 34% year-on-year to €592m, weighed down by bloated customer inventories and persistent weakness in the automotive industry. Soitec swung to a net loss of €222m, a stark contrast to the profit it had posted a year earlier. The one bright spot in the cash flow statement was the free cash flow, which turned positive at €63m after a negative €23m in the prior period.

Adding to the pressure, Morgan Stanley executed an off-market sale that reduced its stake to 4.49%, slipping below the 5% disclosure threshold. The investment bank now controls 3.54% of voting rights. That move came as short sellers retreated sharply: net short positions fell from 5.62% to roughly 1.93% of capital over the past month, a sign that bearish bets are being unwound even as the stock corrects.

The annualised volatility stands at a staggering 160.62%. The shares have now retreated more than 26% from the 52-week high of €199.95 and are trading below their 20-day moving average. Yet despite the recent rout, the stock remains up roughly 488% since the start of the year, a gain that underscores the immense speculation around its role in the artificial intelligence supply chain.

Management is leaning heavily on that narrative for a turnaround. In the fourth quarter, demand for AI-related Photonics-SOI products helped lift revenues above analyst expectations by 1.3%. The company is also pushing newer offerings such as SmartSiC to drive growth. For the current first quarter of fiscal 2027, Soitec has guided for a 15% sequential revenue increase, following a projected 20% jump in the prior quarter that was meant to reverse a 29% drop in the third quarter.

Analysts remain unpersuaded by the AI optimism. The average price target hovers around €118, well below the current market level, and most research houses rate the stock only a “hold”. The market’s enthusiasm for Soitec’s AI exposure appears to have run well ahead of the profit forecasts from sell-side analysts, leaving the shares vulnerable to any disappointment from the broader chip sector or a slowdown in customer orders.