Broadcom shares fell 4.7% in Frankfurt on Friday, extending losses seen in U.S. after-hours trading, despite the company forecasting first-quarter revenue above Wall Street expectations. Investors focused instead on management’s warning that profit margins are likely to decline as artificial intelligence-related sales make up a larger share of revenue.
The move in European trading largely mirrored Broadcom’s reaction in the U.S., highlighting market concern over the cost implications of the company’s expanding role in the AI chip sector.
Broadcom has accelerated its push into artificial intelligence semiconductors, a strategy that has raised questions among investors about long-term profitability given the scale of required capital investment. While AI demand is driving strong revenue growth, it is also pressuring margins due to higher costs and a changing product mix.
On a post-earnings call, Chief Executive Officer Hock Tan said Broadcom has secured a backlog of approximately $73 billion, which the company expects to deliver over the next 18 months. However, senior management cautioned that margins could come under pressure as AI-related revenue continues to grow.
