Broadcom Inc. (NASDAQ:AVGO) CEO Hock Tan warned Monday that many artificial intelligence investors don’t understand what they’re buying, comparing their behavior to casino gambling even as his company forecasts $230 billion in annual AI chip revenue by fiscal 2028.
“A lot of investors have no clue what they are investing in,” Tan said at an event in Singapore, Bloomberg reported.
He said investors were setting “very extreme expectations,” only to discover that investing in AI was “almost like they are in a casino.”
Tan also questioned whether businesses were getting value from AI, comparing companies experimenting with the technology to children burning through arcade tokens without learning anything.
Tan’s concerns extended to the companies supplying those AI services.
He said OpenAI’s roughly $50 billion annualized revenue in September demonstrated strong demand, but its enormous training costs offered little indication of long-term profitability.
Broadcom’s $230 Billion AI Bet
Tan’s warning comes as Broadcom enjoys extraordinary growth from the AI investment boom.
The company reported $16.7 billion in fiscal third-quarter AI semiconductor revenue, up 221% year over year, and expects $21.7 billion in the fourth quarter.
Broadcom develops custom AI chips and networking equipment for data centers, with OpenAI and Anthropic among the customers underpinning its growth expectations.
Tan forecasts annual AI chip revenue will quadruple from approximately $58 billion this fiscal year to $230 billion in fiscal 2028.
Part of that projected growth depends on OpenAI, whose long-term profitability Tan himself questions.
Capital Could Become the Next AI Bottleneck
Tan warned that access to financing, rather than memory chip shortages, could become the industry’s biggest constraint.
Broadcom itself is increasingly involved in financing the expansion.
Banks last week began syndicating a $60 billion AI financing package tied to Anthropic’s lease of Google-designed chips, including $42 billion in senior loans supported by Broadcom’s credit rating, the Financial Times reported.
The arrangement could help turn demand for AI chips into actual sales, while exposing Broadcom to additional financial risks if customers struggle to meet their commitments.
On Polymarket, traders assign a 6% probability to a qualifying AI downturn by December 31, with $2.44 million traded. The contract requires three of six events within 90 days, including 50% declines from record highs for Broadcom or Nvidia Corp. (NASDAQ:NVDA).
Broadcom shares fell 1% to $357 in late-morning trading Monday, leaving the stock roughly 28% below its 52-week high of $495.
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