Quick overview

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Broadcom’s stock declined after its sales forecast for the booming market fell short of investors’ high expectations. The shares decreased approximately 11% over the past week, reversing earlier gains following remarks made by Chief Executive Officer Hock Tan during a conference call with analysts.

Some investors were disappointed to learn that the company has a backlog of $73 billion for AI products scheduled for shipment over the next six quarters. Tan, however, tried to clarify that this amount was a “minimum.” “We do expect much more as more orders come in for shipments within those next six quarters,” he stated.

Therefore, our lead time can vary from six months to a year, depending on the specific product.

Investors were looking for more clarity on when and how the company will benefit from AI, and the conference call came after a dizzying surge in Broadcom shares. Instead, they received a vague schedule without an AI revenue forecast for 2026, along with concerns about the company’s profit margins tightening.

Tan mentioned that the company received an $11 billion order from AI startup Anthropic PBC in the fourth quarter but cautioned that total margins were decreasing due to the sale of AI products.

He noted that Broadcom’s annual AI revenue forecast was “a moving target.” “I find it difficult to predict exactly what ’26 will look like,” he remarked. “Therefore, I would prefer not to offer you guys any advice.”

The call followed a generally positive earnings report. The fiscal first quarter, which concludes in February, is expected to generate $19.1 billion in sales, the company stated.  Analysts projected an average of $18.5 billion. Furthermore, the company increased its quarterly dividend by 10% to 65 cents per share. He stated that a $10 billion deal in the third quarter preceded the $11 billion Anthropic order in the fourth.

Tan also mentioned that Broadcom signed a $1 billion customer order, though he did not name the customer. As part of a major data center build-out, Broadcom has benefited from demand for its custom chips, gaining a larger share in an industry primarily led by Nvidia.