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OpenAI Revenue Drop Sinks Broadcom Stock
9 Oct
Summary
- Broadcom shares fell 4.4% after OpenAI's revenue was clarified.
- OpenAI's annualized revenue was reported as $50 billion, not $68 billion.
- Broadcom may help OpenAI finance custom chip purchases.
Broadcom's stock price declined by 4.4% on Thursday, following a substantial adjustment in the reported revenue figures for OpenAI, a key collaborator.
OpenAI clarified that its annualized revenue was around $50 billion as of September, a revision from the previously widely reported $68 billion. This figure of $68 billion had included gross revenue from partners for comparison with a competitor.
The market's reaction was influenced by the general correlation between AI stocks and the news regarding OpenAI's financials. Broadcom has a direct link, as it was reportedly arranging approximately $50 billion in financing for OpenAI to acquire AI-centric chips.
Furthermore, Broadcom is developing a custom AI processor, codenamed "Jalapeno," expected for deployment later this year. Concerns arose that if OpenAI's financial standing is less robust than anticipated, its demand for Broadcom's chips could be affected.
Despite these market jitters, often attributed to accounting disclosures and financing deal perceptions, Broadcom's valuation remains attractive at 31 times forward earnings. Investors may find this dip an opportunity to acquire shares at a reduced price.
