{"id":312315,"date":"2025-12-12T16:02:24","date_gmt":"2025-12-12T16:02:24","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/312315\/"},"modified":"2025-12-12T16:02:24","modified_gmt":"2025-12-12T16:02:24","slug":"broadcom-shares-fall-as-margin-warning-sparks-ai-payoff-worries","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/312315\/","title":{"rendered":"Broadcom shares fall as margin warning sparks AI payoff worries"},"content":{"rendered":"\n<p class=\"yf-7hmkaz\">By Zaheer Kachwala and Joel Jose<\/p>\n<p class=\"yf-7hmkaz\">Dec 12 (Reuters) &#8211; Broadcom shares fell nearly 6% before the market open on Friday after the chipmaker warned growing sales of \u200blower-margin custom AI processors were squeezing profitability, sparking worries that the business \u200cmay be less lucrative.<\/p>\n<p class=\"yf-7hmkaz\">The warning on margin impact deepened investor jitters over Big Tech&#8217;s AI returns, a day \u200cafter Oracle fell 10.8% due to high capital spending for a debt-funded AI infrastructure buildout.<\/p>\n<p class=\"yf-7hmkaz\">Investor scrutiny of AI spending has intensified in recent months after a blistering tech-stock rally that pushed some valuations to record highs. Circular deals &#8211; where firms invest in their own customers &#8211; have \u2060also fanned fears of a \u200cbubble.<\/p>\n<p class=\"yf-7hmkaz\">Still, several analysts said the AI potential remains intact, with stocks benefiting from the technology, especially chipmakers, set for big annual gains as \u200dthe industry spends hundreds of billions to bring more capacity online.<\/p>\n<p class=\"yf-7hmkaz\">Broadcom, whose services are crucial for companies looking to develop custom AI processors, has secured massive contracts this year, including $21 billion from \u200bAnthropic in the past two quarters for Google&#8217;s custom Ironwood chips. Despite the fall \u200con Friday, its stock is up nearly 70% for the year.<\/p>\n<p class=\"yf-7hmkaz\">It trades at about 32 times enterprise value to forward core earnings, compared with 19.6 times for AI chip giant <a href=\"https:\/\/finance.yahoo.com\/quote\/NVDA\/\" data-ylk=\"slk:Nvidia;elm:context_link;itc:0;sec:content-canvas\" class=\"link \" rel=\"nofollow noopener\" target=\"_blank\">Nvidia<\/a> and 30.2 times for Advanced Micro Devices. Nvidia shares are up 34% this year, while AMD has gained 83%.<\/p>\n<p class=\"yf-7hmkaz\">&#8220;Right now, the spending intentions still seem so big by \u2060so many, hitting that panic button is premature,&#8221; \u200bsaid Ben Reitzes, analyst at Melius Research.<\/p>\n<p class=\"yf-7hmkaz\">But Broadcom said \u200bits margins will be pressured through the year due to a higher mix of AI revenue. It has a $73 billion backlog that it expects \u200dto ship over \u2060the next 18 months.<\/p>\n<p class=\"yf-7hmkaz\">If premarket losses hold, Broadcom is likely to shed more than $110 billion in market value.<\/p>\n<p class=\"yf-7hmkaz\">&#8220;We attribute the selloff to commentary on gross margin dilution \u2060from AI chips. We aren&#8217;t concerned with this, given that these chips are operating-margin-accretive,&#8221; analysts at Morningstar \u200csaid.<\/p>\n<p class=\"yf-7hmkaz\">(Reporting by Alun John in London, Zaheer Kachwala and Joel Jose in Bengaluru; \u200cEditing by Amanda Cooper and Arun Koyyur)<\/p>\n","protected":false},"excerpt":{"rendered":"By Zaheer Kachwala and Joel Jose Dec 12 (Reuters) &#8211; Broadcom shares fell nearly 6% before the market&hellip;\n","protected":false},"author":2,"featured_media":312316,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[554,124197,733,4308,21575,81303,86,56,54,55],"class_list":{"0":"post-312315","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-ai-processors","10":"tag-artificial-intelligence","11":"tag-artificialintelligence","12":"tag-broadcom","13":"tag-gross-margin","14":"tag-technology","15":"tag-uk","16":"tag-united-kingdom","17":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/312315","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=312315"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/312315\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/312316"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=312315"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=312315"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=312315"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}