Broadcom shares slide after investors seek bigger AI payoff

Stocks

Summary:

Broadcom shares fell as investors questioned the timing and profitability of its AI push, disappointed by limited guidance, margin pressure warnings, and a vague outlook despite strong earnings and rising AI demand.

Broadcom Inc., a chip company vying with Nvidia Corp. for AI computing revenue, slumped after its sales outlook for the red-hot market failed to meet investors’ lofty expectations.

The shares fell about 5% in premarket trading on Friday, following unsettling commentary from Chief Executive Officer Hock Tan on a conference call with analysts. He said the company has a backlog of $73 billion in AI product orders that will be shipped over the next six quarters — a number that disappointed some investors. But Tan sought to clarify that the figure was a “minimum.”

“We do expect much more as more orders come in for shipments within that next six quarters,” he said. “So our lead time, depending on the particular product it is, can be anywhere from six months to a year.”

The conference call followed a dizzying run-up in Broadcom shares, and investors were seeking more clarity on when and how the company will get a payoff from AI. Instead, they got a vague timetable without an AI revenue forecast for 2026 — mixed with some concerns about tightening profit margins.

Though Tan said that the company received an $11 billion order from AI startup Anthropic PBC in the fourth quarter, he warned that total margins were narrowing because of AI product sales.

Broadcom also held off on giving an annual AI revenue forecast, with Tan saying it was “a moving target.”

“It’s hard for me to pinpoint what ’26 is going to look like precisely,” he said. “So I’d rather not give you guys any guidance.”

The call followed a generally upbeat earnings report on Thursday afternoon. Sales will be about $19.1 billion in the fiscal first quarter, which ends Feb. 1, the company said. Analysts had estimated $18.5 billion on average, according to data compiled by Bloomberg. The company also boosted its quarterly dividend 10% to 65 cents a share.

The $11 billion Anthropic order in the fourth quarter followed a $10 billion deal in the third, he said. Broadcom also signed another customer order worth $1 billion, Tan said, without identifying the client.

Broadcom has benefited from demand for its custom chips as part of a massive data center build-out, giving it a growing piece of an industry dominated by Nvidia.

Broadcom shares slide after investors seek bigger AI payoff_1

Broadcom Has Outperformed Its Chip Peers in Past Year

an said that AI semiconductor revenue would double to $8.2 billion in the first quarter, compared with a year earlier.

Much of the recent buzz around Broadcom stems from its ties to some of the biggest AI model providers. ChatGPT maker OpenAI signed a pact with Broadcom for its own AI chip designs. In another transaction, Anthropic agreed to use tens of billions of dollars’ worth of computing services based on Alphabet Inc.’s Google Cloud TPUs. The latter components also rely on Broadcom designs, helping fuel investor enthusiasm about the chipmaker’s AI prospects.

Broadcom shares had earlier closed at $406.37 in New York, leaving them up 75% this year.

The Palo Alto, California-based company has a wide-ranging lineup that spans communications chips, networking components and software.

As part of its bid to generate greater revenue from AI, Broadcom has been updating its networking equipment to move data more quickly inside and between data centers. With AI models getting more complex, the ability to connect chips, racks of servers and whole buildings is growing more critical.

In the fiscal fourth quarter, which ended Nov. 2, Broadcom posted sales of $18 billion. Earnings rose to $1.95 a share, excluding some items. Analysts had estimated revenue of $17.5 billion and profit of $1.87 a share.

As part of Broadcom’s OpenAI deal, announced in October, the ChatGPT maker will use custom chips and networking components to help power its artificial intelligence services.

The deal will bring in additional revenue to Broadcom’s custom chip unit and provide deeper access to the booming AI market. Though the company has already seen its revenue from artificial intelligence computing climb, Broadcom has remained in the shadow of Nvidia, the top seller of AI processors.

Tan, the CEO, stands to benefit handsomely if that business meets long-term financial goals. The executive is due to get 610,521 shares of Broadcom if AI revenue hits $90 billion by fiscal 2030. If the sales reach $120 billion, Tan is poised for 300% of the payout.

Source: Bloomberg

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Winkelmann

Political

Economic

Nicolas Maduro (left) and his wife Cilia Flores

The US Treasury's Office of Foreign Assets Control published the list of sanctions on Thursday that included three nephews of Venezuela's president Nicolas Maduro and his wife Cilia Flores.

It is the latest move by the US in its ongoing political conflict with the Venezuelan regime and it comes a day after it seized an oil tanker off the country's coast.

Known in Venezuela as the 'narco-nephews' for their involvement in drug trafficking,Franqui Flores, Carlos Flores and Efrain Campo have all been denied access to any property or financial assets held in the US, and US companies and citizens can now be penalized for doing business with them.

Panamanian businessman Ramon Carretero, six firms and six Venezuela-flagged ships accused of transporting Venezuelan oil, were also included in the sanctions list.

The Treasury Department alleged that Carretero has had business dealings with Maduro's family and has also facilitated oil shipments on behalf of the Venezuelan government.

What the Treasury statement said

"Nicolas Maduro and his criminal associates in Venezuela are flooding the United States with drugs that are poisoning the American people," Treasury Secretary Scott Bessent said in a statement.

"Under President Trump's leadership, Treasury is holding the regime and its circle of cronies and companies accountable for its continued crimes," he added.

Flores and Campo had been jailed for years in the US on narcotics convictions. Flores had already been sanctioned in July 2017, but he was removed from Treasury's list in 2022 during the Biden administration, during an effort to promote negotiations for democratic elections in Venezuela.

US plans more tanker seizures, sources say

Meanwhile, sources familiar with the matter said the US was preparing to seize more oil tankers from Venezuela.

Wednesday's tanker seizure was the first of its kind of an oil cargo or tanker from Venezuela, and it comes as the Trump administration has led a large military buildup in the Caribbean.

White House spokeswoman Karoline Leavitt told reporters she did not comment on the reports of future actions on oil tankers, focusing instead on the sanctions package.

"We're not going to stand by and watch sanctioned vessels sail the seas with black market oil, the proceeds of which will fuel narcoterrorism of rogue and illegitimate regimes around the world," Leavitt said.

A reduction or halt in Venezuelan oil exports would certainly strain the Maduro government's finances.

Source: DW

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Justin

Economic

The total value of building permits increased 14.9% from the month before to a seasonally adjusted 13.82 billion Canadian dollars, the equivalent of $10.03 billion, Statistics Canada said Friday.

That was much stronger than the 1.4% drop expected for the month by economists, according to TD Securities, and builds on the upwardly revised 5.9% rise in permits in September.

On a year-over-year basis, the overall value of permits issued last month was up 9.6%.

Building permits provide an early indication of construction activity in Canada and are based on a survey of 2,400 municipalities, representing 95% of the country's population. The issuance of a permit doesn't guarantee that construction is imminent.

Housing starts across Canada slumped 17% in October from a month prior on a seasonally adjusted annualized basis, rolling back a 14% increase in September, Canada Mortgage and Housing Corp. said last month. The six-month moving trend for starts was down 3.0% for the month.

Statistics Canada's data showed construction intentions in the residential sector climbed 14.6% from the previous month to C$8.56 billion, following a 6.6% rise in the value of permits the month before.

Intentions to build multifamily dwellings surged 21.3%, buoyed by the province of Ontario, and specifically the Toronto metropolitan area. Intentions for single-family homes rose a more modest 1.8%, with the gains being primarily attributed to Alberta.

Across Canada, a total of 24,300 multi-family dwellings and 4,100 single-family homes were authorized in October, marking a 13.6% increase from the previous month. Year-to-date, the average number of multi-family dwellings authorized stood at 21,500 a month, up from 19,100 during the same period last year.

Permits for nonresidential buildings were also strongly higher for the month, rising 15.4% to C$5.25 billion, the data agency said. That included a rise in permits for commercial and institutional buildings, more than making up for a dip in industrial plans.

Source: TradingView

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James Whitman

Central Bank

Economic

Federal Reserve Bank of Cleveland President Beth Hammack said she would prefer interest rates to be slightly more restrictive to keep putting pressure on inflation, which is still running too high.

"Right now, we've got policy that's right around neutral," Hammack said Friday during an event in Cincinnati. "I would prefer to be on a slightly more restrictive stance to help continue to put pressure" on the inflation side of the central bank's mandate, she said.

Fed officials delivered a third consecutive rate reduction earlier this week, but a large group of regional bank presidents signaled they opposed the cut. Two officials, Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeff Schmid, officially dissented against the move, saying they preferred to leave rates unchanged. And six policymakers penciled in rate projections suggesting they also opposed a cut.

Hammack didn't vote on monetary policy decisions this year but will vote in 2026. Asked if she supported this week's rate reduction, she didn't directly answer the question but said it was a "complicated decision" since officials are facing pressure on both sides of their mandate.

The Cleveland Fed chief cautioned last month that lower interest rates could prolong the period of above-target inflation. She has previously said that she opposed the rate cut in October and saw little reason for a reduction in December.

Hammack said she is grateful policymakers will receive key data on prices and employment in the coming weeks that should help them understand the trends in the economy — after their publication was delayed by a federal government shutdown. She also said the Fed doesn't have the appropriate tools to address structural changes in the economy.

Inflation has been running above the Fed's 2% target for several years, and has recently been stuck closer to 3%, Hammack said.

Source: Bloomberg

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Gerik

Economic

Commodity

December Decline Reflects Dual Price and Currency Headwinds

According to Reuters calculations based on industry and official data, Russia’s hydrocarbon revenues are expected to fall sharply in December to 410 billion roubles nearly halving from the same month a year earlier. This would bring monthly earnings down to levels not seen since August 2020, when pandemic-related demand collapse drove oil prices to historic lows.

This slump is primarily attributed to two converging factors: weakening global crude prices and a strengthening rouble. The price of Russian oil, converted into roubles for tax purposes, dropped 17.1% from October to 3,605 roubles per barrel in November, sharply compressing government revenue.

Full-Year Shortfall Undermines Fiscal Planning Amid Rising War Costs

The sharp monthly decline adds to a broader trend of fiscal underperformance. Total oil and gas revenues for 2025 are now expected to fall to 8.44 trillion roubles below both the Finance Ministry’s October revision of 8.65 trillion and far short of the original projection of 10.94 trillion roubles. The shortfall underscores the fragility of Russia’s energy-dependent budget at a time when military and security spending continues to rise due to its ongoing conflict in Ukraine.

Hydrocarbon revenues account for roughly a quarter of Russia’s federal budget, meaning the drop will significantly constrain fiscal maneuverability. With Western sanctions limiting financing options and restricting technology imports, the narrowing budget surplus places added pressure on the Kremlin to either curb spending or tap into reserves.

Geopolitical Implications: Economic Leverage as a Tool of Pressure

The deteriorating revenue picture highlights the success of Western strategies aimed at weakening the Russian economy to undermine its war effort. The U.S. and EU have repeatedly stated their goal of cutting off Moscow’s primary revenue streams in order to force de-escalation in Ukraine. The latest figures suggest that sanctions, price caps, and shifts in global oil demand are beginning to bite.

Still, Russia remains the world’s second-largest oil exporter and has found alternative buyers in Asia, particularly China and India, although often at discounted rates. Nonetheless, declining margins from these deals combined with falling global benchmarks are constricting Russia’s fiscal space more than in previous years.

2026 Outlook Clouded by Energy Market Volatility and War Spending

With the Finance Ministry set to publish its final December revenue estimate on January 14, all eyes will be on whether the current revenue slump stabilizes or worsens. Given that crude markets remain under pressure from fears of oversupply and weakening demand, and with the rouble likely to remain firm under limited capital outflows, Russia’s near-term fiscal prospects appear bleak.

Unless energy prices rebound or Russia secures higher-priced contracts outside the Western-dominated financial system, its ability to finance prolonged military operations or sustain domestic spending commitments will face increasing constraints heading into 2026. The Kremlin’s economic resilience is once again being tested not just by sanctions, but by the global market forces reshaping energy economics.

Source: Reuters

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Adam

Commodity

Oil held near its lowest close in almost two months, as concerns about an oversupply offset bullishness in wider financial markets.

Brent traded little changed above $61, reversing an earlier increase. Global stock gauges have record highs in their sights as the Federal Reserve’s interest-rate cut this week and its upbeat assessment of the US economy boosted investor sentiment, but oil markets remain pressured by the prospect of a significant surplus next year.

Concerns about oversupply have helped to push crude toward the lower end of a band it has traded in since mid-October, with Brent futures slowly trending toward $60. The International Energy Agency on Thursday reiterated its prediction for an unprecedented surplus — although slightly below its forecast last month — and said global inventories have swollen to a four-year high.

“Traders are happy to buy a bit of risk across the board, but the fundamental surplus hasn’t gone anywhere,” said Haris Khurshid, Chicago-based chief investment officer at Karobaar Capital LP.

Geopolitical tensions may add some support to oil prices. President Donald Trump announced new sanctions on three of Venezuelan counterpart Nicolas Maduro’s nephews as well as six oil tankers, after the US seized a supertanker off the coast of the Latin American nation on Wednesday.

The ship seizure was just the beginning of a new phase in the Trump administration’s ramped-up pressure campaign against the Venezuelan president, according to people familiar with the operation. The act of economic statecraft is designed to deny Maduro a lifeline of oil revenue and force him to relinquish power, the people said.

Source: Bloomberg

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Michelle

Political

Commodity

Russia-Ukraine Conflict

Russian state oil and gas revenue in December is likely to almost halve from a year earlier to 410 billion roubles ($5.17 billion) as a result of lower crude prices and a stronger rouble, Reuters calculations showed on Friday.

Oil and gas revenue is the leading source of cash for the Kremlin, making up a quarter of federal budget proceeds that have been drained by heavy defence and security spending since Russia began its military campaign in Ukraine in February 2022.

For the entire year, the revenue is set to fall by almost a quarter to 8.44 trillion roubles, below the Finance Ministry's 8.65 trillion rouble forecast, according to calculations based on data from industry sources and official statistics on production, refining and supplies.

Russia reported its lowest monthly oil and gas revenue of 405 billion roubles in August 2020, when oil prices tumbled during the COVID-19 pandemic.

Sergei Konygin, a senior analyst at Moscow-based investment bank Sinara, said that the budget deficit of 1.6 trillion roubles expected in December will be covered by state bonds, but 2026 will be more difficult.

"Next year is a big challenge to the budget as it was formed under an optimistic scenario of oil at $59 (per barrel) and the rouble at 92 (per dollar)," he said.

The Russian oil price used for taxation purposes decreased in November by 16.4% from October to $44.87 a barrel while the rouble strengthened to 80.35 per dollar.

Konygin expects amendments to the budget next spring to make use of the National Wealth Fund to address the deficit under a lower assumed price of oil.

Ukraine and its Western backers have repeatedly said they want to curb Russian oil revenue to force the world's second-largest oil exporter to end the war in Ukraine.

The Finance Ministry had initially expected 10.94 trillion roubles in oil and gas revenue this year but made a downward revision in October to account for global oil prices that have been driven lower by concern over a supply glut.

The Finance Ministry will publish its oil and gas revenue estimates for December on January 14.