Broadcom shares fall as margin warning sparks AI payoff worries

Group 1 - Broadcom shares fell over 11% due to warnings about lower-margin custom AI processors impacting profitability, raising concerns about the business's future profitability [1] - Investor scrutiny of AI spending has increased following a tech-stock rally, with fears of a bubble due to circular deals where firms invest in their own customers [2] - Despite the recent stock drop, Broadcom's stock is up more than 57% for the year, indicating strong overall performance [3] Group 2 - Broadcom has secured significant contracts, including $21 billion from Anthropic for Google's custom Ironwood chips, highlighting its crucial role in AI processor development [3] - The company trades at approximately 32 times enterprise value to forward core earnings, compared to 19.6 times for Nvidia and 30.2 times for AMD, indicating a premium valuation [4] - Broadcom expects its margins to be pressured throughout the year due to a higher mix of AI revenue, with a backlog of $73 billion to be shipped over the next 18 months [5]