Broadcom shares slide after investors seek bigger AI payoff

NEW YORK - Chipmaker Broadcom, vying with Nvidia for AI computing revenue, suffered a stock slide after its sales outlook for the red-hot market failed to meet investors’ lofty expectations.

The shares fell about 4 per cent after hours on Dec 11, reversing earlier gains, following unsettling commentary from chief executive officer Tan Hock Eng on a conference call with analysts.

He said the company has a backlog of US$73 billion (S$93 billion) in AI product orders that will be shipped over the next six quarters – a number that disappointed some investors. But Mr Tan sought to clarify that the figure was a “minimum.” 

“We do expect much more as more orders come in for shipments within that next six quarters,” he said. “So our lead time, depending on the particular product it is, can be anywhere from six months to a year.”

Though Mr Tan said that the company received an US$11 billion order from AI start-up Anthropic PBC in the fourth quarter, he also warned that total profit margins were narrowing because of AI product sales.

Broadcom also held off on giving a 2026 AI revenue forecast. 

“It’s a moving target,” Mr Tan said. “It’s hard for me to pinpoint what ’26 is going to look like precisely. So I’d rather not give you guys any guidance.”

The call followed a generally upbeat earnings report on Dec 11. Sales will be about US$19.1 billion in the fiscal first quarter, which ends Feb 1, the company said. Analysts had estimated US$18.5 billion on average, according to data compiled by Bloomberg. The company also boosted its quarterly dividend 10 per cent to 65 US cents a share.

Broadcom shares had soared in 2025, with investors betting that the company will be a key beneficiary of AI spending. Against that backdrop, the company struggled to satisfy expectations.

The US$11 billion Anthropic order in the fourth quarter followed a US$10 billion deal in the third, he said. Broadcom also signed another customer order worth US$1 billion, Mr Tan said, without identifying the client.

Broadcom has benefited from demand for its custom chips as part of a massive data centre build-out, giving it a growing piece of an industry dominated by Nvidia.

Mr Tan said that AI semiconductor revenue would double to US$8.2 billion in the first quarter compared with a year earlier.

Much of the recent buzz around Broadcom stems from its ties to some of the biggest AI model providers. ChatGPT maker OpenAI signed a pact with Broadcom for its own AI chip designs. In another transaction, Anthropic agreed to use tens of billions of dollars’ worth of computing services based on Alphabet.’s Google Cloud TPUs. The latter components also rely on Broadcom designs, helping fuel investor enthusiasm about the chipmaker’s AI prospects.

As part of its bid to generate greater revenue from AI, Broadcom has been updating its networking equipment to move data more quickly inside and between data centres. With AI models getting more complex, the ability to connect chips, racks of servers and whole buildings is growing more critical.

As part of Broadcom’s OpenAI deal, announced in October, the ChatGPT maker will use custom chips and networking components to help power its artificial intelligence services.

The deal will bring in additional revenue to Broadcom’s custom chip unit and provide deeper access to the booming AI market. Though the company has already seen its revenue from AI computing climb, Broadcom has remained in the shadow of Nvidia, the top seller of AI processors. BLOOMBERG