Way back last week, one equity strategist who specializes in growth stocks fretted about the run-up in shares of Broadcom, which his bank held.

“Our fear is that it’s kinda primed for disappointment,” he said, ahead of the company’s earnings release on December 11.

Truer words have rarely been spoken. Broadcom, which designs the Tensor Processing Units behind Google’s much-discussed Gemini 3 breakthrough, headed into Tuesday riding a three-session plunge the likes of which the stock hasn’t seen since the harrowing days around the onset of the pandemic.

As the figure shows, the loss, including a mild pre-earnings downtrade, was a rather remarkable 17.5%. “Overdue” or not (it was overdue), that’s a big chunk.

Mercifully, the bleeding stopped on Tuesday, when the shares managed to stabilize, but the market-cap loss over the previous three sessions was nearly $350 billion. For context, that’s one whole AMD.

I mention this not because I have anything novel to add to the story (I don’t), but rather because Broadcom didn’t do or say anything “wrong” last week. The proximate cause for the slide was, as I noted on December 12, the perception among impatient investors that the company’s outlook for AI revenue was too ambiguous — and that its AI backlog, $73 billion over the next year and a half, was somehow disappointing.

Although CEO Hock Tan told analysts on the call that the $73 billion figure was more bare minimum than guide — he even said Broadcom expects “much more” in the way of orders over that six-quarter period — the market punished the stock mercilessly.

Such are the perils of dizzying rallies that push multiples into the stratosphere. Not only is there no room for error, there’s almost nowhere to go but down unless management’s willing to promise the moon.

From the “Liberation Day” lows to the eve of Broadcom’s report last week, the company added $1.25 trillion in market cap — 80% of one whole Tesla. That rally left it trading north of 40x on a forward multiple, 20 turns more expensive than usual for the shares.

“Investors [are] grappl[ing] with a visibility gap creating valuation challenges,” Jones Trading’s Mike O’Rourke said. “When Nvidia’s six-month backlog is $500 billion, $73 billion is underwhelming [but] their businesses are considerably different and surprisingly, CEO Hock Tan’s messaging did not help,” O’Rourke went on, calling Broadcom’s slide a “a cautionary tale.”

Yes, “a cautionary tale.” The question’s whether the brutal post-earnings correction for Broadcom’s just that — i.e., a reminder that trees don’t grow to the sky — or a harbinger for the AI trade in general. Now that I think about it, those two characterizations may be one and the same.