# Tech giants shed $2.3T as capital spending booms — buy the infrastructure dip _AI-generated trading idea · LONG · AVGO, NVDA_ > Canonical page: https://commonquant.ai/research/for-you/tech-giants-shed-2-3t-as-capital-spending-booms-buy-the-infr--da4af55f-c338-4c5a-bcf6-a077d7945df4 The giant tech stocks known as the 'Magnificent Seven' just lost $2.3 trillion in value. However, Wall Street notes that companies are still spending a fortune on equipment, meaning Nvidia and Broadcom are perfectly positioned to catch that cash. ## Idea Investors are dumping the Magnificent Seven mega-cap tech stocks due to AI spending concerns, wiping $2.3 trillion off their value. Yet Goldman Sachs highlights that a generational surge in capital spending continues to power the bull market, which directly contradicts the panic. Because Nvidia and Broadcom are the critical suppliers absorbing this corporate spending, the recent pullback looks like a disconnect, creating a strong opportunity to buy the dip on these semiconductor leaders. ## Advanced Analysis ### Verdict: strong thesis, but wait for the dip This is a fundamentally compelling thesis backed by real numbers — NVIDIA's $215.9B in fiscal 2026 revenue at 60.4% operating margins and Broadcom's deleveraging from 1.87 debt-to-equity to 0.76 give the dip-buying logic genuine fundamental teeth. The backtested 97.5% return across 23 trades over 60 months is strong, but the 52.2% win rate and walk-forward fold 1's negative 2.4% return reveal an edge that is thinner than the headline suggests, and neither ticker is near entry today — both need sharp declines that have not materialized. The 12.6% backtest drawdown is survivable, yet both names carry fat tails (kurtosis above 10) and near-zero trailing correlation that could collapse in a synchronized AI selloff. The setup is worth waiting for, but size it as a tactical dip-buy, not a core conviction holding. \*\*Conviction Breakdown\*\* \- \*\*Thesis support (78):\*\* Per the Bloomberg piece on Goldman Sachs, the capex-driven spending backdrop is real and both companies are top-decile free cash flow generators ($96.7B NVDA, $26.9B AVGO). \- \*\*Trade readiness (25):\*\* Neither ticker is close — NVDA's RSI at 67.9 is triggering the exit side, and both names need multi-point ROC deterioration before entry conditions fire. \- \*\*Risk quality (58):\*\* The 12.6% max drawdown and 8% stop loss are manageable, but kurtosis above 10 on both names and a correlation that could spike in a capex downturn warrant caution. \- \*\*Backtest evidence (63):\*\* A 97.5% return with a 52.2% win rate across 23 trades is solid but thin — fold 1 lost 2.4% and the final holdout returned just 1.6%, suggesting regime sensitivity. \- \*\*Fundamentals trend (82):\*\* NVIDIA's 65.5% revenue growth, 76.3% ROE, and 0.047 debt-to-equity are best-in-class; Broadcom's 23.9% growth, 39.9% operating margin, and steady deleveraging confirm both are cash registers of the AI buildout. #### Conviction score breakdown Composite score computed by the server from the applicable evidence-tier dimensions. | Measure | Value | | --- | ---: | | Thesis support | 78/100 | | Trade readiness | 25/100 | | Risk quality | 58/100 | | Backtest evidence | 63/100 | | Fundamentals trend | 82/100 | | Score | 61/100 | | Composite Score | 61/100 | | Evidence Tier | backtested | ### Trade now Neither ticker is anywhere near a buy signal today. The strategy wants a coordinated dip: a 5-day rate of change below negative 5%, the 50-day moving average still sloping upward, and an RSI reading under 45. Right now both names are doing the opposite — \*\*AVGO\*\* closed at $389.11 with a 5-day rate of change of negative 2.7% and an RSI of 51.8, while \*\*NVDA\*\* closed at $211.80 with a positive 5-day ROC of about 5.1% and an RSI of 67.9, actually triggering the exit-side RSI threshold of above 65. The one entry condition that is live is price above the 50-day moving average — AVGO sits $1.72 above its 50-day SMA of $387.39, and NVDA sits $7.25 above its 50-day SMA of $204.55. But that condition alone merely confirms the uptrend is intact; it does nothing without the panic dip that the ROC and RSI thresholds are designed to catch. For AVGO, the 5-day ROC needs to deteriorate by another 2.3 percentage points; for NVDA it needs to swing about 10 percentage points from positive territory into a meaningful decline. "Wait" means exactly this: set alerts at a 5-day ROC of negative 5% and an RSI of 45 on both tickers, and do nothing until both fire on the same daily candle. The exit side is already active on NVDA — RSI at 67.9 has crossed above the 65 threshold — which means if you were holding a position from a prior entry, the strategy would be flashing sell today. The backtest supporting this approach generated a 97.5% return over 60 months across 23 trades with a 52.2% win rate and a worst drawdown of roughly 13%, so the rules have produced results when conditions actually align. On position sizing, the strategy caps each entry at 25% of equity with a hard stop at negative 2.5% and a take-profit at about 5%, giving an effective reward-to-risk of roughly 2:1. The nearest support and resistance levels to watch: \*\*AVGO\*\* has support at $384.00 and resistance at $390.00; \*\*NVDA\*\* has support at $210.00 and resistance at $212.62. A daily close below support would invalidate the dip-buy thesis for that ticker. #### AVGO price and trigger map Uses the idea timeframe and keeps price levels on the price axis. | Measure | Value | | --- | ---: | | Ticker | AVGO | | Timeframe | 1d | #### NVDA price and trigger map Uses the idea timeframe and keeps price levels on the price axis. | Measure | Value | | --- | ---: | | Ticker | NVDA | | Timeframe | 1d | ### Capital spending fuel meets fortress fundamentals The idea's core thesis — that a generational surge in capital spending directly contradicts the panic selling in mega-cap tech — finds strong support in the financial profiles… #### AVGO Operating margin Operating margin trend from CommonQuant fundamentals/XBRL data; +771.2% from first to latest point. | Measure | Value | | --- | ---: | | 2016-10-30 | \-0.030891238670694866% | | 2017-01-29 | \0.12225175163082871% | | 2017-04-30 | \0.11766118381558412% | | 2017-04-30 | \0.11312649164677804% | | 2017-07-30 | \0.12726704190118823% | | 2017-07-30 | \0.14519381581895585% | | 2017-10-29 | \0.13444091630755273% | | 2018-02-04 | \0.1770227144734372% | | 2018-05-06 | \0.20733004545014988% | | Latest Value | \0.20733004545014988% | | Change Pct | \771.1613207237127% | | Ticker | AVGO | | Timeframe | reported periods | #### AVGO Return on equity Return on equity trend from CommonQuant fundamentals/XBRL data; +678.5% from first to latest point. | Measure | Value | | --- | ---: | | 2016-10-30 | \-0.07949350886816603% | | 2017-10-29 | \0.08341138772491989% | | 2018-02-04 | \0.21422922182868545% | | 2018-05-06 | \0.3102254654317523% | | 2018-05-06 | \0.11594474069916112% | | 2018-08-05 | \0.4059449220457526% | | 2018-08-05 | \0.04356695322745155% | | 2018-11-04 | \0.459879206212252% | | Latest Value | \0.459879206212252% | | Change Pct | \678.5116454916172% | | Ticker | AVGO | | Timeframe | reported periods | #### AVGO sector percentile check Ranks AVGO against 561 companies in its sector using CommonQuant fundamentals. | Measure | Value | | --- | ---: | | Free cash flow | \99.64349376114082th percentile | | Operating margin | \98.3633387888707th percentile | | Return on equity | \86.94267515923568th percentile | | Gross margin | \70.03676470588235th percentile | | Ticker | AVGO | | Sector | Information Technology | | Peer Count | 561 | ### Scores - **Conviction score breakdown:** 61 - **Thesis support:** 78 - **Trade readiness:** 25 - **Risk quality:** 58 - **Backtest evidence:** 63 - **Fundamentals trend:** 82 ### Watch items - **AVGO — 5-day Rate of Change** - **AVGO — RSI (14)** - **AVGO — Price vs 50-day SMA** - **NVDA — 5-day Rate of Change** - **NVDA — RSI (14)** - **NVDA — RSI (14)** - **AVGO — Price vs 50-day SMA** - **NVDA — Price vs 50-day SMA** - **AVGO — ROC (5) below -5** - **AVGO — Price above SMA (50)** - **AVGO — RSI (14) below 45** ## Key details - Symbols: AVGO, NVDA - Timeframes: D1 - Tags: \#tech, \#dip\_buy, \#macro ## Community - Upvotes: 24 - Views: 86 - Copies: 0 - Cosigns: 0 ## News sources - [Nvidia, Micron, and Broadcom hold the stock market's fate in the palm of their hands](https://finance.yahoo.com/markets/article/nvidia-micron-and-broadcom-hold-the-stock-markets-fate-in-the-palm-of-their-hands-130753236.html) — Yahoo Finance - [Magnificent Seven stocks lose $2.3 trillion in June 2026](https://finance.yahoo.com/markets/stocks/articles/magnificent-seven-stocks-lose-2-121343239.html) — Yahoo Finance - [Goldman Sachs Says Capital Spending Is Powering the Bull Market](https://www.bloomberg.com/news/videos/2026-07-01/goldman-sachs-oppenheimer-on-capital-spending-video) — Bloomberg ## Related - [AVGO trade ideas](https://commonquant.ai/markets/avgo) - [NVDA trade ideas](https://commonquant.ai/markets/nvda) - [Latest market news](https://commonquant.ai/news) ## About CommonQuant Research Ideas and Advanced Analysis are generated with fresh, LLM-selected news headlines and grounded in SEC XBRL fundamentals and peer percentiles. Strategies built from these ideas are automatically backtested (over a timeframe-dependent historical window with walk-forward tuning) and stress-tested before they can go live, then monitored against the news hourly while they run.