Fears of slower AI development are overblown for AVGO; CEO confirms strong/durable demand with projected revenue growth to $115B (FY27) and $230B (FY28).

We talked about the AI fears yesterday. They hammered chip stocks, but the Broadcom CEO, he's finger wagon. Not so fast. It is not cracking here. Broadcom, ticker AVGO, their stock edged lower in Tuesday in their pre-market trading, falling 4.77% in the previous session.

Risk appetite remained weak with NASDAQ SNP both down. Monday's decline came as leaders at major artificial intelligence companies called for a slower pace of advanced AI development over safety concerns.

The debate raised fears that slower AI development could eventually weigh on demand for chips and data center hardware.

However, Broadcom CEO Hawktan said the debate has not changed the chipmaker's long-term AI revenue outlook. Tan told CNBC Monday that the demand for AI compute infrastructure remains quote very strong and durable end quote particularly for inference.

Broadcom expects AI semiconductor revenue to reach 115 billion in fiscal 2027 and double to 230 billion in fiscal 2028.

This comments followed Anthropic CEO Dario Emod's call for slower pace of Frontier AI development. Enthropic is expected to become Broadcom's largest custom chip customer in 2027.

Okay, so I'm not trying to put words in Hawkan's mouth here. I'm not I'm not trying to say something that wasn't said here, but sanity check me on this group. If they're talking about slowing down, the AI companies are talking about slowing down.

And there are fears that this is going to lead to revenue declines in some of the companies that supply this, but those companies are telling you, "Nope, demand's good. We're good for the next year, maybe even the year after that.

Like, we're going to double, keep growing. Demand's not going anywhere." What conclusion do you reach? To me, it sure seems like a no, they're not actually slowing down, and b even if they did slow down, it would really not matter to these.

Let me know how how you uh kind of go through that. To me, this is much do about nothing.

The debate weighed heavily on AI stocks Monday. Broadcom shares fell about 4.8% while the isshare semiconductor ETF or SOXX dropped 5.6%.

Kan agreed that AI developments do need safeguards. However, he said generative AI could create huge value. He compared its potential impact to the industrial revolution.

Tan's comments provided a bullish counterpoint to concerns about slower AI development. Still, Broadcom shares remain under pressure Tuesday as investors weighed the broader riskoff environment.

Against that backdrop, Broadcom's technical setup remains important. the stock is trading below several key moving averages which could make it more sensitive to broader market weakness.

Now that's not something to to joke around with. Um if the market does come back in it is quite possible that a lot of these stocks come in with it even if something is not actually bad there.