Jonathan Raa | Nurphoto | Getty Images

Broadcom shares rose more than 6% on Tuesday, their second-best day of the year, after the chip designer announced it would produce future versions of artificial intelligence chips for Google, and signed an expanded deal with Anthropic.

The pact with Anthropic will give the AI startup access to about 3.5 gigawatts worth of computing capacity, drawing on Google’s homegrown tensor processing units, or TPUs.

Broadcom’s stock has endured a tough start to 2025, falling almost 10% prior to Tuesday’s rally, as concerns about the AI buildout coupled with soaring energy costs caused by the war in Iran pushed investors out of many leading tech names.

Analysts at Mizuho maintained their buy recommendation on Broadcom and wrote in a report on Tuesday that the deals with Google and Anthropic are a boon to the company’s AI business, and that “the tighter TPU partnership strengthens AVGO’s position.”

Last month, Broadcom reported blowout earnings, and CEO Hock Tan touted strong future demand for the company’s chips. He told analysts that he anticipates AI chip revenue in 2027 that’s “significantly in excess of $100 billion.”

Matt Britzman, an analyst at Hargreaves Lansdown, said the latest deals “should help ease some of the recent nervousness around TPU competition” and indicate that Broadcom’s “largest customer sees meaningful demand visibility well into the future.”

“We already saw upside to medium-term revenue and profit expectations off the back of recent results; these new deals help underpin that idea if deployment ramps as planned,” Britzman said.

Citi analysts maintained their buy rating for the stock, seeing Broadcom surpassing its $100 billion revenue target and reaching more than $130 billion off the back of the Google deal. 

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Signage at the Broadcom Inc. headquarters in San Jose, California, U.S., on Monday, June 2, 2025.

David Paul Morris | Bloomberg | Getty Images

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The sell-off in artificial intelligence stocks continued unabated Friday stateside. Broadcom shares tumbled more than 11% as investors grew concerned over lower margins and uncertain deals. Names such as Nvidia, Advanced Micro Devices and Oracle fell in sympathy, which caused major U.S. indexes to close lower.

It was a motif patterning the week. Even though the Dow Jones Industrial Average rose 1.1% week on week on the back of outperformance by financial stocks, tech names dragged down the S&P 500 and the Nasdaq Composite, which fell 0.6% and 1.6% respectively for the week.

That said, investors could have just been jittery amid the narrative of an apparent AI bubble, and were spooked by any sign of bad news. After all, Broadcom’s earnings — as well as its guidance for the current quarter — breezed past expectations.

“Frankly we aren’t sure what else one could desire as the company’s AI story continues to not only overdeliver but is doing it at an accelerating rate,” Bernstein analyst Stacy Rasgon, who has a “buy” rating on Broadcom, wrote in a Friday note.

Future prospects also look rosy, according to UBS. “We expect high profitability and the accelerating impact of the AI, power and resources, and longevity themes to drive 2026 performance,” said strategist Sagar Khandelwal.

But in the near term, investors may still be flighty, unless something concretely reassuring, such as Oracle achieving positive cash flow, reassures them the snapping sound is just a twig in the forest.

What you need to know today

U.S. stocks dragged down by AI names. Major indexes fell Friday, a day after they hit record highs. Asia-Pacific markets traded lower Monday. South Korea’s Kospi retreated roughly 1.5% as of 2:45 p.m. Singapore time (1:45 a.m. ET), leading losses in the region.

China’s economic slowdown deepens. Even though the country’s retail sales and industrial production grew year on year in November, their increase missed forecasts and slowed from the previous month. Investment in fixed assets in the January-to-November period contracted from a year earlier.

The end of the ‘Berkshire way’? Several aspects of Berkshire Hathaway’s leadership transition are signaling that the conglomerate is drifting away from the famously decentralized “Berkshire way,” CNBC’s Alex Crippen writes.

Hong Kong court finds Jimmy Lai guilty. The 78-year-old pro-democracy activist and media baron was ruled guilty of sedition and collusion with foreign countries by a Hong Kong court on Monday. The results might unsettle foreign investors, analysts say.

[PRO] China’s food security strategy. The spat between Beijing and Washington over soybean purchases has highlighted the evolution of China’s domestic agriculture industry. Goldman Sachs thinks this is the best way to play the sector.

And finally…

Copper prices have soared this year, hitting multiple record highs, fueled by supply disruptions and fears over U.S. tariffs.

Imagebroker/sunny Celeste | Imagebroker | Getty Images

Copper could hit ‘stratospheric new highs’ as hoarding of the metal in U.S. continues

Copper prices have hit multiple record highs this year, fueled by supply disruptions and as fears over U.S. tariffs have led to a surge in demand. The rally is set to continue into 2026.

Citi analysts expect prices of the red metal to skyrocket on the back of stronger demand led by the energy transition and artificial intelligence sectors. Electrification, grid expansion and data-center build-outs require large amounts of the metal for wiring, power transmission and cooling infrastructure.

— Lee Ying Shan

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Broadcom CEO Hock Tan.

Lucas Jackson | Reuters

Broadcom’s quarterly results and guidance sailed past Wall Street estimates. It didn’t matter.

The chipmaker’s shares plummeted 11% on Friday, their worst day since January, as investors ran for the exits on the artificial intelligence trade. Oracle dropped 4.5% a day after plunging 10% following its earnings report.

Nvidia and Advanced Micro Devices, the two leading makers of graphics processing units for AI workloads, slid about 3% and 5%, respectively.

AI has been the driver for the stock market and the broader economy this year, so any negative sentiment has potentially far-reaching consequences. The Nasdaq on Friday fell about 1.69%, and the S&P 500 declined by 1%.

The companies getting hit the hardest are the ones most closely tied to AI infrastructure, which has been booming as hyperscalers build out their data centers to try and meet what they describe as insatiable demand for compute-intensive AI services. Broadcom makes custom chips for many of the the largest tech companies, and saw its market cap about double each of the past two years before rallying again in 2025.

“This stock is up 75-80% year to date. You’re seeing a little bit of a pullback,” Vijay Rakesh, an analyst at Mizuho, told CNBC’s “Squawk on the Street” on Friday. “We would be buyers on this pullback.”

Mizuho raised its price target on the stock to $450 from $435. It closed on Friday just below $360.

“This is still where the growth is,” Rakesh said. “They are still the big supplier to Google on their entire hardware stack, to Meta, to Anthropic and even OpenAI coming down the road.”

Broadcom reported revenue growth of 28% during the quarter, largely due to a 74% increase in AI chip sales, to a total of $18.02 billion, topping the $17.49 billion average analyst estimate, according to LSEG. Adjusted earnings per share of $1.95 adjusted topped the $1.86 average estimate.

CEO Hock Tan said Broadcom expects AI chip sales this quarter to double from a year earlier to $8.2 billion, both from custom AI chips as well as semiconductors for AI networking.

One concern among investors is that margins are coming down, at least in the short term, due to higher up-front costs. CFO Kirsten Spears said on the earnings call that “gross margins will be lower” for some of Broadcom’s AI chip systems because the company will have to buy more parts to produce the server racks.

Broadcom also said it had a $73 billion backlog of AI orders over the next 18 months. Part of that is from $21 billion of orders from Anthropic, which the company revealed as a key customer on Thursday.

While OpenAI has been a highly touted customer following a multibillion-dollar agreement announced in October, Tan doused some hope for the deal, telling investors late Thursday that, “We do not expect much in ’26.”

Bernstein analyst Stacy Rasgon said in a note on Friday that “AI angst” was driving Broadcom’s shares lower.

“Frankly we aren’t sure what else one could desire as the company’s AI story continues to not only overdeliver but is doing it at an accelerating rate,” Rasgon, who recommends buying the stock and raised his price target, wrote in the note.

Oracle has been facing more extreme skepticism. The stock is now down more than 40% from its record reached in September. The company beat on earnings but missed on revenue in its report on Wednesday, and investors were disappointed they didn’t get more detail on how Oracle will finance its massive buildout that so far has required mounds of debt.

CoreWeave, which is investing in data centers to offer cloud-based AI services, sank 10% on Friday and has lost more than half its value since peaking in June.

WATCH: Mizuho raises price target on Broadcom

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A sign is posted in front of a Broadcom office in San Jose, California, on Dec. 12, 2024.

Justin Sullivan | Getty Images

Broadcom reported second-quarter earnings on Thursday that beat Wall Street expectations, and the chipmaker provided robust guidance for the current period.

Here’s how the chipmaker did versus LSEG consensus estimates:

• Earnings per share: $1.58 adjusted versus $1.56 expected
• Revenue: $15 billion versus $14.99 billion expected

Broadcom said it expects about $15.8 billion in third-quarter revenue, versus $15.7 billion expected by Wall Street analysts. Revenue in the latest quarter rose 20% on an annual basis.

The company said net income increased to $4.97 billion, or $1.03 per share, from $2.12 billion, or 44 cents per share, in the year-ago period. The company instituted a 10-for-1 stock split a year ago.

Broadcom shares are up 12% this year after more than doubling last year on investor optimism for the company’s custom chips for artificial intelligence. In March, Broadcom CEO Hock Tan said it was developing AI chips with three large cloud customers.

“We continue to make excellent progress on the multiyear journey of enabling our three customers and four prospects to deploy custom AI accelerators,” Tan said, adding that the partners are “unwavering” in their plans to invest in AI infrastructure.

Broadcom said that it had $4.4 billion in AI revenue during the quarter, attributing the sales to its networking parts that connect complicated server clusters.

Tan said in a statement that Broadcom expects $5.1 billion in AI chip sales in the third quarter, adding that the company’s “hyperscale partners continue to invest.” He said he expected the company’s AI growth to continue through fiscal 2026.

Hyperscalers are companies that build out large cloud systems to rent out to their own customers. They include Amazon, Google and Microsoft.

Those sales are reported in the company’s semiconductor solutions business, which had $8.4 billion in revenue during the quarter, a 17% increase from last year, and above $8.34 billion analyst estimate, according to StreetAccount.

The company’s software business, which includes VMware, grew 25% year-over-year to $6.6 billion in sales, beating the StreetAccount estimate.

WATCH: Semiconductor sector is showing signs of a cyclical bottom

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Intel shares rallied 12% on Tuesday following a Wall Street Journal report that both Broadcom and Taiwan Semiconductor Manufacturing are potentially weighing bids that could result in splitting the embattled chipmaker.

The stock was on pace for its best day since March 2020.

The Wall Street Journal reported that Broadcom may consider a play for the company’s chip design and marketing segment, citing people familiar with the matter, while TSMC is interested in a stake or complete control of Intel’s factories. The companies have not filed bids and talks are largely informal, the Journal reported.

The iconic American chipmaker’s stock has continued to sink lower in recent years, shedding billions in market value. Intel fell behind on the artificial intelligence tailwinds that have swept up the broader semiconductor sector.

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Hock Tan, CEO of Broadcom (L) and former CEO of Intel, Pat Gelsinger.

Reuters | CNBC

It was a big year for silicon in Silicon Valley — but a brutal one for the company most responsible for the area’s moniker.

Intel, the 56-year-old chipmaker co-founded by industry pioneers Gordon Moore and Robert Noyce and legendary investor Arthur Rock, had its worst year since going public in 1971, losing 61% of its value.

The opposite story unfolded at Broadcom, the chip conglomerate run by CEO Hock Tan and headquartered in Palo Alto, California, about 15 miles from Intel’s Santa Clara campus.

Broadcom’s stock price soared 111% in 2024 as of Monday’s close, its best performance ever. The current company is the product of a 2015 acquisition by Avago, which went public in 2009.

The driving force behind the diverging narratives was artificial intelligence. Broadcom rode the AI train, while Intel largely missed it. The changing fortunes of the two chipmakers underscores the fleeting nature of leadership in the tech industry and how a few key decisions can result in hundreds of billions — or even trillions — of dollars in market cap shifts.

Broadcom develops custom chips for Google and other huge cloud companies. It also makes essential networking gear that large server clusters need to tie thousands of AI chips together. Within AI, Broadcom has largely been overshadowed by Nvidia, whose graphics processing units, or GPUs, power most of the large language models being developed at OpenAI, Microsoft, Google and Amazon and also enable the heftiest AI workloads.

Despite having a lower profile, Broadcom’s accelerator chips, which the company calls XPUs, have become a key piece of the AI ecosystem.

“Why it’s really shooting up is because they’re talking about AI, AI, AI, AI,” Eric Ross, chief investment strategist at Cascend, told CNBC’s “Squawk Box” earlier this month.

Intel, which for decades was the dominant U.S. chipmaker, has been mostly shut out of AI. Its server chips lag far behind Nvidia’s, and the company has also lost market share to longtime rival Advanced Micro Devices while spending heavily on new factories.

Intel’s board ousted Pat Gelsinger from the CEO role on Dec. 1, after a tumultuous four-year tenure.

“I think someone more innovative might have seen the AI wave coming,” Paul Argenti, professor of management at Dartmouth’s Tuck School of Business, said in an interview on “Squawk Box” after the announcement.

An Intel spokesperson declined to comment.

Broadcom is now worth about $1.1 trillion and is the eighth U.S. tech company to cross the trillion-dollar mark. It’s the second most valuable chip company, behind Nvidia, which has driven the AI boom to a $3.4 trillion valuation, trailing only Apple among all public companies. Nvidia’s stock price soared 178% this year, but actually did better in 2023, when it gained 239%.

Until four years ago, Intel was the world’s most valuable chipmaker, nearing a $300 billion market cap in early 2020. The company is now worth about $85 billion, just got booted off the Dow Jones Industrial Average — replaced by Nvidia — and has been in talks to sell off core parts of its business. Intel now ranks 15th in market cap among semiconductor companies globally.

‘Not meant for everybody’

Following the Avago-Broadcom merger in 2015, the combined company’s biggest business was chips for TV set-top boxes and broadband routers. Broadcom still makes Wi-Fi chips used in laptops as well as the iPhone and other smartphones.

After a failed bid to buy mobile chip giant Qualcomm in 2018, Broadcom turned its attention to software companies. The capstone of its spending spree came in 2022 with the announced acquisition of server virtualization software vendor VMware for $61 billion. Software accounted for 41% of Broadcom’s $14 billion in revenue in the most recent quarter, thanks in part to VMware.

What’s exciting Wall Street is Broadcom’s role working with cloud providers to build custom chips for AI. The company’s XPUs are generally simpler and less expensive to operate than Nvidia’s GPUs, and they’re designed to run specific AI programs efficiently.

Cloud vendors and other large internet companies are spending billions of dollars a year on Nvidia’s GPUs so they can build their own models and run AI workloads for customers. Broadcom’s success with custom chips is setting up an AI spending showdown with Nvidia, as hyperscale cloud companies look to differentiate their products and services from their rivals.

Broadcom’s chips aren’t for everyone, as only a handful of companies can afford to design and build their own custom processors.

“You have to be a Google, you have to be a Meta, you have to be a Microsoft or an Oracle to be able to use those chips,” Piper Sandler analyst Harsh Kumar told CNBC’s “Squawk on the Street” on Dec. 13, a day after Broadcom’s earnings. “These chips are not meant for everybody.”

While 2024 has been a breakout year for Broadcom — AI revenue increased 220% — the month of December has put it in record territory. The stock is up 45% for the month as of Monday’s close, 16 percentage points better than its prior best month.

On the company’s earnings call on Dec. 12, Tan told investors that Broadcom had doubled shipments of its XPUs to its three hyperscale providers. The most well known of the bunch is Google, which counts on the technology for its Tensor Processing Units, or TPUs, used to train Apple’s AI software released this year. The other two customers, according to analysts, are TikTok parent ByteDance and Meta.

Tan said that within about two years, companies could spend between $60 billion and $90 billion on XPUs.

“In 2027, we believe each of them plans to deploy 1 million XPU clusters across a single fabric,” Tan said of the three hyperscale customers.

In addition to AI chips, AI server clusters need powerful networking parts to train the most advanced models. Networking chips for AI accounted for 76% of Broadcom’s $4.5 billion of networking sales in the fourth quarter.

Broadcom said that, in total, about 40% of its $30.1 billion in 2024 semiconductor sales were related to AI, and that AI revenue would increase 65% in the first quarter to $3.8 billion.

“The degree of success amongst the hyperscalers in their initiatives here is clearly an area up for debate,” Cantor analyst C.J. Muse, who recommends buying Broadcom shares, wrote in a report on Dec. 18. “But any way you slice it, the focus here will continue to be a meaningful boon for those levered to custom silicon.”

Intel’s very bad year

Prior to 2024, Intel’s worst year on the market was 1974, when the stock sank 57%.

The seeds for the company’s latest stumbles were planted years ago, as Intel missed out on mobile chips to Qualcomm, ARM and Apple.

Rival AMD started taking market share in the critical PC and server CPU markets thanks to its productive manufacturing relationship with Taiwan Semiconductor Manufacturing Company. Intel’s manufacturing process has been a notch behind for years, leading to slower and less power-efficient central processing units, or CPUs.

But Intel’s most costly whiff is in AI — and it’s a big reason Gelsinger was removed.

Nvidia’s GPUs, originally created for video games, have become the critical hardware in the development of power-hungry AI models. Intel’s CPU, formerly the most important and expensive part in a server, has become an afterthought in an AI server. The GPUs Nvidia will ship in 2025 don’t even need an Intel CPU — many of them are paired to an Nvidia-designed ARM-based chip.

As Nvidia has reported revenue growth of at least 94% for the past six quarters, Intel has been forced into downsizing mode. Sales have declined in nine of the past 11 periods. Intel announced in August that it was cutting 15,000 jobs, or about 15% of its workforce.

“We are working to create a leaner, simpler, more agile Intel,” board Chair Frank Yeary said in a Dec. 2 press release announcing Gelsinger’s departure.

A big problem for Intel is that it lacks a comprehensive AI strategy. It’s touted the AI capabilities on its laptop chips to investors, and released an Nvidia competitor called Gaudi 3. But neither the company’s AI PC initiative nor its Gaudi chips have gained much traction in the market. Intel’s Gaudi 3 sales missed the company’s own $500 million target for this year.

Late next year, Intel will release a new AI chip that it codenamed Falcon Shores. It won’t be built on Gaudi 3 architecture, and will instead be a GPU.

“Is it going to be wonderful? No, but it is a good first step in getting the platform done,” Intel interim co-CEO Michelle Holthaus said at a financial conference held by Barclays on Dec. 12.

Holthaus and fellow interim co-CEO David Zinsner have vowed to focus on Intel’s products, leaving the fate of Intel’s costly foundry division unclear.

Before he left, Gelsinger championed a strategy that involved Intel both finding its footing in the semiconductor market and manufacturing chips to compete with TSMC. In June, at a conference in Taipei, Gelsinger told CNBC that when its factories get up and running, Intel wanted to build “everybody’s AI chips,” and give companies such as Nvidia and Broadcom an alternative to TSMC.

Intel said in September that it plans to turn its foundry business into an independent unit with its own board and the potential to raise outside capital. But for now, Intel’s primary client is Intel. The company said it didn’t expect meaningful sales from external customers until 2027.

At the Barclays event this month, Zinsner said the separate board for the foundry business is “getting stood up today.” More broadly, he indicated that the company is looking to remove complexity and associated costs wherever possible.

“We are going to constantly be scrutinizing where we’re spending money, making sure that we’re getting the appropriate return,” Zinsner said.

WATCH: Intel plans to take chip subsidiary Altera public

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