Broadcom (NASDAQ:AVGO) shares fell about 10% intra-day on Friday as investor concerns over margin pressure and delayed revenue contributions from OpenAI outweighed stronger-than-expected quarterly results and upbeat guidance.
The chipmaker issued a positive outlook for the current quarter, projecting that revenue from its artificial intelligence chips would double year-over-year in fiscal first-quarter results. Broadcom also disclosed an AI chip backlog of approximately $73 billion expected over the next 18 months.
During the post-earnings conference call, Chief Executive Officer Hock Tan said revenue from Broadcom’s non-AI chip business was expected to decline sequentially in the current quarter due to weak demand. Tan added that AI-related revenue carried lower gross margins than non-AI products, while non-AI revenue was expected to remain flat year-over-year.
Addressing questions around OpenAI, Tan said Broadcom did not anticipate meaningful financial contributions from its OpenAI contract in 2026. Under the agreement, Broadcom will provide OpenAI with up to 10 gigawatts of data center infrastructure between 2026 and 2029, with the bulk of returns expected in 2027, 2028, and 2029. Tan also said the company was separately working with OpenAI on a custom AI accelerator that was in a “very advanced stage.”
The comments reignited broader investor concerns about OpenAI’s ability to fulfill its long-term commitments, which has become a focal point of uncertainty across the AI industry in recent weeks.
Broadcom reported fiscal fourth-quarter adjusted earnings of $1.95 per share on revenue of $18.02 billion, exceeding Investing.com consensus estimates of $1.87 per share on revenue of $17.45 billion. For the fiscal first quarter, the company guided revenue of roughly $19.1 billion, above analyst expectations of $18.31 billion.
