Broadcom is sprinting to win the artificial intelligence arms race with a new custom chip developed alongside OpenAI, while simultaneously betting billions on data-center infrastructure — yet investors are heading for the exits. The stock closed Thursday at €332.95, roughly 22% below its June record of €429.60, despite a string of blockbuster financial metrics and ambitious long-term forecasts.
The disappointment stems from a market that had priced in even more aggressive guidance. When Broadcom reaffirmed its target of surpassing $100 billion in AI semiconductor revenue by fiscal 2027, rather than raising it, traders sold first and asked questions later. Over the past month, the shares have shed nearly 10%, and the 50-day moving average of €354.40 now sits comfortably above the current price. The stock is only holding above its 200-day average of €310.52, keeping the long-term uptrend technically intact.
A Chip Built for Speed and Cost
In a bid to deepen its grip on the AI hardware market, Broadcom and OpenAI engineered a new processor codenamed “Jalapeño,” designed specifically for large language models. The chip took just nine months to reach production readiness and, according to the company, halves computing costs compared with conventional graphics processing units — all without requiring the expensive liquid-cooling systems typical of high-performance AI chips. Taiwan Semiconductor Manufacturing Co. will handle fabrication, and Microsoft’s data centers are set to deploy the first units by the end of 2026.
The development cements Broadcom’s role as an indispensable partner for tech giants, but the market reaction to the announcement was curiously negative, pulling the stock lower on the news. Insiders also sent a cautionary signal: Mark David Brazil, a company insider, disclosed plans to sell 25,000 shares on Thursday, a move that often unsettles retail investors.
The Numbers Behind the Noise
Despite the stock’s slide, the underlying business is firing on all cylinders. In the second fiscal quarter, Broadcom posted revenue of $22.2 billion, a 48% surge from a year earlier, while free cash flow surpassed $10 billion. AI-specific chip sales hit $10.8 billion, an eye-popping 143% increase. For the third quarter, management expects total revenue of roughly $29.4 billion, with the AI component climbing to $16 billion — representing more than 200% year-over-year growth.
Should investors sell immediately? Or is it worth buying Broadcom?
Analysts remain largely bullish. Of 27 ratings, 24 are “buy” and three are “hold,” with a consensus price target of $516.91. CLSA, for instance, reiterated its “outperform” rating and set a target of $600, implying substantial upside from current levels. However, the bar has been raised so high that even a reiteration of guidance can trigger a selloff.
Backing the Vision With Billions
Broadcom is not just designing chips; it is financing the infrastructure that will run them. Through the AI XPV Platform, a joint venture with Apollo Global Management and Blackstone, the company is building out more than 20 gigawatts of computing capacity for AI labs by 2028. Apollo has committed an initial tranche of $35 billion, which will fund data-center buildouts for Anthropic at sites operated by Fluidstack, starting in mid-2026.
This direct link between Broadcom’s chip business and large-scale AI financing means that as the infrastructure expands, demand for Broadcom’s specialized processors and networking solutions should grow in tandem. Already, the company has secured $30 billion in binding orders for its AI chips, backing up the $100 billion revenue goal with concrete contracts.
For now, however, the market demands that every quarter’s results beat elevated expectations. Broadcom’s next test comes in September when it reports third-quarter earnings. If the Jalapeño chip’s promise and the infrastructure bets translate into upside surprises, the stock may finally close the gap between its narrative and its valuation.
Ad
Broadcom Stock: Buy or Sell?! New Broadcom Analysis from June 26 delivers the answer:
The latest Broadcom figures speak for themselves: Urgent action needed for Broadcom investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from June 26.
Broadcom: Buy or sell? Read more here...
