AVGO Earnings Show A.I. Demand "Accelerating" Amid Long-Term Buildout

Core Viewpoint - Broadcom's recent earnings report initially appeared strong, surpassing expectations, but subsequent reactions indicated concerns about shipment delays and a larger-than-expected backlog, leading to a decline in margins for the next quarter [2][3][6] Financial Performance - Broadcom's earnings report showed good demand and exceeded numbers, but the market reaction was negative due to concerns about not significantly exceeding expectations, particularly in the AI sector [2][4][5] - The company anticipates AI demand to accelerate next year, potentially doubling in growth the following year, with existing customers like Google and new customers like Anthropic contributing to this growth [6][12] Market Reaction - The selloff in Broadcom's stock is viewed as unjustified by analysts, who believe it overlooks the broader positive outlook for AI [7][8] - Concerns in the market stem from fears that the rollout of AI technologies and the necessary infrastructure, such as data centers, may not happen as quickly as anticipated [9][10] Customer Orders and Future Outlook - Broadcom has secured significant purchase orders, including a $10 billion order from Anthropic and an additional $11 billion order announced recently, indicating strong future growth potential [11][12] - The company has also announced a 10-gigawatt deal with OpenAI for capacity over three years, although analysts express skepticism about the feasibility of rapid data center buildouts due to supply and power constraints [13][14]