3 REASONS AVGO EARNINGS REACTION WENT NEGATIVE

ShayBoloor
12-12 23:24

3 REASONS $Broadcom(AVGO)$ EARNINGS REACTION WENT NEGATIVE

1. The backlog quality suddenly looked less secured

Many investors treated the OpenAI relationship like a typical binding hyperscaler contract but Broadcom’s “multiyear journey” language in the Q&A made it sound more like a general framework than a firm capacity commitment.

2. The revenue timing moved far out

Management made it clear that meaningful XPU revenue does not show up in 2026 & instead ramps in 2027–2029 and long-dated revenue always carries higher risk so this needs to be discounted.

3. Supply constraints cap 2026 upside

Broadcom disclosed a $72B backlog with 18-month lead times which signals they're already running at full capacity & cannot accelerate deliveries even if demand spikes so that limits how much they can monetize the hottest phase of hyperscaler AI spend.

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