AI trading has been moving from one hardware bottleneck to another, with many speculating where the next bottleneck could be in order to secure astronomical profits. What many don’t realize is that these bottlenecks raise a serious question for companies: where to deploy their cash to gain a supply advantage over their competitors. This makes the balance sheet itself a huge bottleneck, and Broadcom just found out the hard way.
Back in October, I covered AVGO stock at a time when OpenAI was signing deals left and right. The deal with Broadcom was for 10 gigawatts of custom AI accelerators, designed by OpenAI and implemented by Broadcom. As of today, the question is who will finance the first phase of the deal for 1.3 gigawatts of data center capacity. Last month, OpenAI reported that it failed to meet its new user and revenue goals. Now it can’t finance the $18 billion needed to launch “Project Nexus,” the code name for its deal with Broadcom.
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This development comes even though hyperscalers raised their capital spending expectations for 2026 in their respective earnings calls. Microsoft (MSFT) will spend $190 billion in 2026, and Alphabet (GOOG) (GOOGL) plans a similar amount. However, Satya Nadella’s company may not be willing to support OpenAI in this case. OpenAI’s negative cash flows and failure to hit revenue targets are making investors nervous, and it’s just starting to show. This also brings back the AI ​​bubble debate, but for Broadcom shareholders, the question now is who will come in and fill the funding gap so the company can contribute to building AI infrastructure, with or without OpenAI.
About Broadcom Stock
Broadcom is a technology company specializing in semiconductor devices and infrastructure software solutions. The company operates through the infrastructure software and semiconductor solutions segments. Its offerings include network connectivity, wireless device connectivity, servers, storage system solutions, broadband solutions and others.
Broadcom shares have more than doubled over the past year, significantly outperforming the S&P 500 ($SPX), which returned about 30% over the same period. It has also continued to outperform the S&P 500 so far this year, gaining about 19% compared to the broader market’s returns of about 7%.
