Broadcom shares slide as AI revenue outlook falls short of market expectations

Broadcom’s stock dipped after the company projected slower-than-expected visibility into future AI revenue, despite reporting strong quarterly results, new multibillion-dollar orders and rising demand for custom chips powering large-scale artificial intelligence deployments.

Broadcom Inc. shares came under pressure today after the company’s latest commentary on its AI business failed to match investor optimism, even as demand for its custom silicon continues to accelerate. The chipmaker’s stock fell nearly 5% in premarket trading, dragged down by concerns over its limited revenue visibility for the booming AI market in 2026.

Chief Executive Hock Tan told analysts the company currently has a $73 billion backlog of AI-related product orders scheduled for delivery over roughly six quarters. While the backlog underscores surging interest in Broadcom’s custom accelerators and networking hardware, the number fell short of what some investors had anticipated. Tan emphasised that the figure represents a minimum commitment and is expected to grow as customers place additional orders.

Despite the strong forward pipeline, Tan refrained from offering a specific AI revenue outlook for fiscal 2026, calling the projections “a moving target” amid rapidly shifting customer requirements. His reluctance to issue long-range guidance sparked fresh questions about margin pressures tied to AI products, which he acknowledged are weighing on overall profitability.

Strong quarterly performance and major AI wins

The cautious tone overshadowed an otherwise robust earnings update. Broadcom forecast $19.1 billion in revenue for the fiscal first quarter ending February 1, outpacing analyst expectations of $18.5 billion. The company also increased its quarterly dividend by 10% to 65 cents per share.

Tan disclosed that Broadcom secured another $11 billion order from Anthropic in the fourth quarter, in addition to a $10 billion commitment earlier this year. A separate unnamed customer signed a $1 billion contract. Meanwhile, AI semiconductor revenue is projected to double year-on-year to $8.2 billion in the upcoming quarter.

Expanding role in global AI infrastructure

Broadcom’s growing traction in AI stems from partnerships with major model developers and hyperscalers. OpenAI recently selected Broadcom to design custom chips and high-performance networking components, while Google Cloud’s TPU systems—used by Anthropic—also rely on Broadcom technology.

The company, which offers a wide range of communications chips, networking hardware and enterprise software, is modernising its infrastructure solutions to handle the escalating data movement requirements of advanced AI workloads. Broadcom ended the fiscal fourth quarter with $18 billion in revenue, beating Wall Street expectations and reinforcing its rising but still competitive position against industry heavyweight Nvidia.