As tech leaders fall sharply from their peaks, investors are split on what to do next.
Some see it as a long-awaited Wall Street sale to grab a piece of these tech titans on the cheap.
Others contemplate a possible value trap.
Three technology leaders – Alphabet Inc. (NASDAQ: GOOGL), Fortinet Inc. (NASDAQ: FTNT), and Broadcom Inc. (NASDAQ: AVGO) – have seen roughly 30% of their equity values wiped out from the recent pullbacks.
Let’s unpack the insights behind their massive stock rout.
Alphabet: Capex Anxiety Meets Cloud Growth
Alphabet’s share price pulled back sharply from its peak of more than US$400 in May 2026 to around US$280, wiping out close to one-third of its market capitalisation.
The catalyst?
Earnings per share (EPS) missed in the third quarter of 2026 (3Q2026), coming in at US$2.12 against consensus analyst estimates of US$3.02.
As Alphabet owns a stake in the publicly listed SpaceX, a fall in the share price of the latter caused a non-operating accounting loss of US$8.7 billion for the quarter, which weighed on the bottom line.
Furthermore, Alphabet’s heavy capital outlays spooked investors, as it announced 3Q2026 quarterly capex of US$51.4 billion, pushing its free cash flow (FCF) to negative US$9.1 billion.
Although Alphabet’s 2026 capex is expected to stay within the guided range of US$195 billion to US$205 billion, capex spending in 2027 is projected to increase significantly, fuelling investors’ concerns.
However, Alphabet’s operating engines remain strong.
Its 3Q2026 revenue surged 25% year on year (YoY) to US$127.6 billion, driven by Google Cloud, which climbed 103% to US$30.7 billion.
Meanwhile, operating income increased 30% YoY to US$40.58 billion, with the operating margin improving from 31% to 32%, demonstrating improving operating leverage.
Right now, the market is offering Alphabet’s shares at a price-to-earnings (P/E) ratio of 13x – a significant discount relative to its Magnificent Seven peers, which trade at a median P/E of 31.6x.
Fortinet: Bottom-line Momentum Persists Despite Rising Costs
Fortinet share price has fallen around 30% despite the global cybersecurity company’s 3Q2026 revenue expanding 20% YoY to US$2.08 billion.
The revenue growth was driven by a 37% surge in product revenue to US$765 million, anchored by the growth in secure networking hardware and term licences.
Meanwhile, service revenue grew 13% to US$1.31 billion as the revenue for FortiGuard and other security subscription services was recognised.
Crucially, total gross margin contracted 1.8 percentage points to 79% as Fortinet shifts towards lower-margin product revenue, with the margin compression worsened by rising costs of memory chips and inventory-related expenses.
Moreover, although Fortinet is winning massive enterprise clients, these clients typically activate their services in phases, meaning the revenue is realised more slowly, exerting top-line pressure on Fortinet.
Still, Fortinet’s bottom-line momentum remains strong.
Its 3Q2026 operating income surged 29% to US$704.3 million and it delivered US$864.8 million in FCF. Fortinet demonstrated strong operating leverage as its top-line growth outpaced expense growth.
The verdict?
The latest sell-off reflects short-term market anxieties, rather than a structural decline of Fortinet’s business.
Broadcom: Valuation Reset vs Custom AI Dominance
From a peak of around US$490, Broadcom’s share price has dropped more than 30% to about US$330 per share, resetting its trailing P/E from over 70 to a more palatable level of over 40.
Still, investors should not ignore the custom chip designer’s concentration risk, with direct sales to one distributor accounting for 50% of its 3Q2026 net revenue.
In addition, its top five end customers account for approximately 55% of 3QFY2026 net revenue.
Despite these concentration risks, Broadcom remains dominant in custom chip design.
Revenue for its AI-driven Semiconductor Solutions segment skyrocketed 127% YoY to US$20.8 billion, lifting consolidated 3Q2026 revenue 85.5% YoY to US$29.59 billion, with an operating margin of 53.9%.
Backed by long-term demand from Big Tech firms such as Alphabet, Broadcom’s AI-led growth is expected to continue to 2031.
Crucially, Broadcom’s business is cash generative.
In the nine months ended 2 August 2026 (9MFY2026), Broadcom’s FCF increased 64.2% YoY to $31.9 billion – a stark contrast to hyperscalers alarming negative FCF.
The current valuation reset of a cash-rich business like Broadcom may make it worth a closer look for long-term investors.
Get Smart: Navigating Market Declines with Discipline
A 30% contraction is an opportunity, not necessarily to buy, but to analyse the reason behind it with discipline rather than emotions.
It’s easy to succumb to myopic market noise and lose sight of durable businesses that compound in value over time.
Amid market overreactions, Alphabet, Fortinet, and Broadcom display unique strengths.
Has the market bottomed? No one knows.
Smart investors know better than to time the bottom.
Instead, they buy in stages and track the operating metrics that truly matter.
If the market falls further, will you be ready… or fully invested?
This is where most investors get it wrong. Our FREE report shows how to stay prepared for what comes next. Get it free here.
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Disclosure: Larry L. owns shares of Alphabet and Broadcom.
