Broadcom CEO Hock Tan said many AI investors do not understand what they are buying and likened the boom to a casino. His company still targets $230 billion in annual AI chip revenue by fiscal 2028, and he warned that financing could become the industry's biggest constraint.
Broadcom Chief Executive Hock Tan compared the AI boom to a casino while his company forecasts AI chip revenue reaching $230 billion a year by fiscal 2028. Few companies have gained more from the AI investment wave than Broadcom, which makes the warning notable.
Tan questions what investors are buying
Speaking at an event in Singapore on Monday, Tan said many investors have "no clue" what they are investing in, according to Bloomberg. He likened companies experimenting with AI to children who spend arcade tokens quickly without learning anything.
His scepticism extended to AI developers. Tan said OpenAI's annualised revenue of around $50 billion in September showed strong demand, but argued that its training costs give little sign of long-term profitability.
Broadcom's own AI chip sales keep climbing
Broadcom's AI semiconductor revenue more than tripled to around $17 billion in its fiscal third quarter, and the company expects about $22 billion in the fourth quarter. Tan forecasts annual AI chip revenue will rise roughly fourfold, from about $58 billion this fiscal year to $230 billion in fiscal 2028.
Part of that growth depends on OpenAI, the same company whose path to profit he has now questioned. Anthropic is another key customer.
Financing emerges as the constraint
Tan said access to capital, rather than memory chip shortages, could become the industry's biggest constraint. Broadcom is also becoming more involved in financing the build-out.
Banks last week began syndicating a $60 billion AI financing package tied to Anthropic's lease of Google-designed chips, the Financial Times reported. The package includes $42 billion of senior loans supported by Broadcom's credit rating, which could expose the chipmaker to added financial risk if customers struggle to meet their commitments.
Source: investingLive
Trading involves risk.
Risk Disclaimer
