The semiconductor manufacturer Broadcom Inc. (AVGO), which is competing with Nvidia Corp. (NVDA) for revenue from AI computing, fell after its sales forecast for the booming market fell short of investors high expectations.
Following disturbing remarks made by CEO Hock Tan on a conference call with analysts, the shares dropped almost 5% in premarket trade on Friday.
Some investors were upset to see that the company had a backlog of $73 billion in AI product orders that would be shipped over the next six quarters.
Tan, however, tried to make it clear that the number was a "minimum." "As more orders come in for shipments within those next six quarters, we do expect much more," he stated. "Therefore, our lead time can range from six months to a year, depending on the specific product."
Investors were looking for additional information about when and how Broadcom will benefit from AI, and the conference call came after a stunning surge in the company's stock price.
Rather, they received a hazy schedule without an AI revenue projection for 2026, along with some worries about declining profit margins.
Investors were looking for additional information about when and how Broadcom will benefit from AI, and the conference call came after a stunning surge in the company's stock price.
Rather, they received a hazy schedule without an AI revenue projection for 2026, along with some worries about declining profit margins.
Tan stated that Anthropic PBC (ANTH.PVT), an AI startup, placed a $11 billion order with the company in the fourth quarter, although he cautioned that the sales of AI products were reducing overall margins.
Tan stated that Broadcom's yearly AI sales projection was "a moving target," thus the company likewise refrained from providing one.
"I find it difficult to predict exactly what '26 will look like," he remarked. "So I'd prefer not to offer you guys any advice." The call came following Thursday afternoon's largely positive earnings announcement.
According to the corporation, sales for the fiscal first quarter, which ends on February 1, will be roughly $19.1 billion. Based on information gathered by Bloomberg, analysts had projected an average of $18.5 billion. Additionally, the corporation increased its quarterly dividend by 10% to 65 cents per share.
According to him, a $10 billion deal in the third quarter preceded the $11 billion Anthropic order in the fourth. Tan stated that Broadcom had signed a $1 billion customer order, although he did not name the customer.
As part of a large data center build-out, Broadcom has profited from demand for its bespoke chips, giving it a greater share of a sector dominated by Nvidia.
