Broadcom Inc.
The stock remains in focus as investors weigh robust demand for AI infrastructure against rising concerns over financing costs, return on investment and the sustainability of heavy spending across the sector.
Hock Tan Says Capital Could Become AI's Biggest Constraint
Broadcom CEO Hock Tan told at DBS Asia Future Forward Conference in Singapore on Monday that access to capital could become a larger obstacle to AI expansion than shortages of chips, memory or electricity.
"[What] I think might be the biggest constraint is capital," Tan said.
He said industry supply bottlenecks have repeatedly emerged and eased over the past two years. Memory shortages could improve within a year, while wafer and power constraints could also ease as more capacity comes online.
Still, Tan said demand remains exceptionally strong, CNBC reported on Monday.
"There is more demand for compute infrastructure than we can supply," he said, adding that the imbalance could persist through 2029 and potentially into 2030.
Intel Corp.
"If there's any challenge in the front, it's capital and the cost of capital, and then the other part is in the longer run, people want to see the ROI," he said.
Tan Questions AI Investment Discipline
Tan also warned investors against treating the AI boom like a speculative trade, Bloomberg reported on Monday.
"A lot of investors have no clue what they are investing in," Tan said. They "set very extreme expectations only to find out that it's almost like they are in a casino."
He also questioned whether some enterprises are spending effectively on AI and said model developers ultimately need customers that can generate meaningful returns from the technology.
Tan said OpenAI's annualized revenue approaching $50 billion shows revenue potential but does not yet prove durable profitability because of the high cost of model training.
Broadcom Comments Add To Semiconductor Volatility
Tan's remarks helped pressure global semiconductor stocks, adding to investor concerns ahead of earnings season, the Financial Times reported on Tuesday.
Société Générale strategist Manish Kabra told the FT, "What's changing is not demand, but sentiment," adding that investors are scrutinizing high profit margins as Chinese competition increases.
Pictet Asset Management strategist Arun Sai described the concentrated AI trade as "jittery ahead of the broader earnings season."
BNP Paribas Asset Management strategist Ecaterina Bigos told the FT that higher bond yields and doubts about returns on AI investment were driving the selloff, adding, "Investors are starting to question how the earnings are going to deliver."
China Competition Adds Another Risk
The Financial Times also highlighted concerns around China's CXMT, which said it had made progress on more advanced DRAM technology.
Société Générale's Frank Benzimra told the FT Chinese competition is becoming "an additional headwind for memory companies" alongside expectations that memory-price growth could slow.
For Broadcom, the broader backdrop remains mixed: AI infrastructure demand is still outpacing supply, but investors are increasingly focused on whether financing, capital costs and eventual returns can support the next phase of the buildout.
AVGO Price Action: Broadcom shares were down 1.91% at $339.62 during premarket trading on Thursday, according to Benzinga Pro data.
