Broadcom Shares Drop 10% as Margin Concerns and OpenAI Timing Overshadow Earnings Beat

Core Viewpoint - Broadcom's shares experienced a significant decline of approximately 10% intra-day due to investor concerns regarding margin pressure and delayed revenue from OpenAI, despite reporting stronger-than-expected quarterly results and providing positive guidance for the upcoming quarter [1] Financial Performance - Broadcom reported fiscal fourth-quarter adjusted earnings of $1.95 per share on revenue of $18.02 billion, surpassing consensus estimates of $1.87 per share on revenue of $17.45 billion [5] - For the fiscal first quarter, the company guided revenue of approximately $19.1 billion, exceeding analyst expectations of $18.31 billion [5] AI Business Outlook - The company projected that revenue from its artificial intelligence chips would double year-over-year in the fiscal first quarter, with an AI chip backlog of around $73 billion expected over the next 18 months [2] Non-AI Business Concerns - Revenue from Broadcom's non-AI chip business is expected to decline sequentially in the current quarter due to weak demand, with non-AI revenue anticipated to remain flat year-over-year [3] OpenAI Contract Insights - Broadcom does not expect significant financial contributions from its OpenAI contract until 2026, with the majority of returns anticipated in 2027, 2028, and 2029 [4] - The company is collaborating with OpenAI on a custom AI accelerator that is reportedly in a "very advanced stage" [4]