Broadcom Inc. (AVGO) stock slipped 4% on Thursday after The Information reported that the company’s custom AI chip deal with OpenAI has hit a major financing hurdle. The $18 billion agreement, expected to make Broadcom one of OpenAI’s largest long‑term silicon partners, is now in question as the AI company works to secure the funding needed to move the project forward.
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According to the report, AVGO has told OpenAI it will finance the first phase of the effort, a buildout requiring 1.3 GW of data‑center capacity, only if Microsoft (MSFT) agrees to purchase roughly 40% of the custom chips.
Under the proposed deal, Microsoft would buy the chips and rent them back to OpenAI. However, Microsoft has not yet committed to buying these specific chips, creating uncertainty about the structure of the deal.
Financing Snag Clouds Broadcom’s AI Outlook
The setback comes as demand for custom AI accelerators continues to surge across the industry. Broadcom has been one of the biggest beneficiaries of this trend, supplying hyperscalers with specialized silicon and high‑performance networking gear that power large‑scale AI training clusters.
Investors reacted quickly to the report, worried that delays or changes to the agreement could weigh on Broadcom’s AI revenue growth. While the company maintains a diversified customer base, including Google (GOOGL), Meta (META), and other cloud giants, the OpenAI deal was expected to be a meaningful contributor to its custom‑chip business over the coming years.
Is AVGO Stock a Good Buy Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Broadcom stock based on 26 Buys and four Holds assigned in the last three months. Further, the average AVGO stock price target of $467.89 per share implies 13% upside potential.
