Broadcom CEO sees viable OpenAI business but warns of AI funding constraints
Finn Gomez/Getty Images News
Broadcom (AVGO) CEO Hock Tan said OpenAI’s (OPENAI) $50B annualized revenue as of September points to a viable business, but the chipmaker’s close ties to the AI startup raise questions about the sustainability of AI demand and the financing behind it.
Speaking at an event in Singapore, Tan said OpenAI (OPENAI) remains unprofitable because of heavy spending on model training and computing, adding that its revenue run rate offers limited insight into long-term profitability.
"Your parents give you $10 of tokens, you finish it in 10 minutes and you haven't learned anything," Tan said. "That's what happening in enterprises today."
Broadcom’s (AVGO) role in supplying custom AI chips to OpenAI (OPENAI), alongside financing arrangements supporting AI infrastructure purchases, has drawn attention to the links between chip demand and customer funding.
At the same time, the cost of insuring Broadcom’s (AVGO) debt against default has reportedly reached a record high, pointing to increased investor concern about its credit risk.
More on Broadcom, OpenAI
- Broadcom: Growth Reliance On OpenAI And Anthropic Becomes Concerning
- OpenAI Is Too Big To Save? The AI Selloff Was A Warning
- Broadcom: Anthropic Financing Risk Is Priced Too High, Buy
- Google holds big lead over Anthropic, Meta, OpenAI in race for best October AI model
- Broadcom CEO says capital will be biggest constraint for AI development: report
Recommended For You
Comments
If you type a company or ETF ticker symbol in capital letters we will automatically link to the symbol page. You can remove the link by deleting the $ in the comment.
Have a tip? Submit confidentially to our News team. Found a factual error? Report here.
Related Stocks
| Symbol | Last Price | % Chg | ||
|---|---|---|---|---|
AVGO AVGO | 354.73 | -1.88% | ||
| Post: | 353.20 | -0.43% | ||
OPENAI OPENAI | - | - | ||
