Broadcom Hits a Bottleneck as OpenAI Revenue Concerns Claim Their First Casualty

The AI trade has been moving from one hardware bottleneck to the next, with many speculating where the next bottleneck could lie so they can lock in astronomical gains. What many fail to realize is that these bottlenecks raise a serious question for companies, namely, where to deploy their cash to gain a supply advantage over competitors. This makes the balance sheet itself a huge bottleneck, and Broadcom (AVGO) just found it out the hard way.

In October, I covered the AVGO stock at a time when OpenAI was signing deals left and right. The agreement with Broadcom was for 10 gigawatts of custom AI accelerators, designed by OpenAI and deployed 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. Just last month, OpenAI reported it failed to achieve its new users and revenue targets. Now, it can’t finance the $18 billion needed to…