As a major player reaping the benefits of the burgeoning artificial intelligence (AI) computing power expansion, Broadcom has witnessed a remarkable surge in its stock price this year. However, the tides turned on December 12. During the earnings call, CEO Hock Tan disclosed that the company had successfully secured a fifth customer for its bespoke AI accelerator, known as the XPU, with an order value reaching a staggering $1 billion. Yet, this figure failed to meet the lofty expectations of some investors.

Tan underscored the fact that Broadcom currently boasts a substantial backlog of AI product orders, valued at a whopping $73 billion. These orders are anticipated to be fulfilled over the course of the next six quarters, with the potential for future order volumes to escalate even further. Despite these promising prospects, the market harbored doubts regarding Broadcom's AI business growth potential. This skepticism was compounded by the management's inability to furnish specific AI revenue growth projections for the fiscal year 2026. Consequently, this led to a precipitous drop in the stock price during after-hours trading.