New York, June 24, 2026, 19:03 (EDT)
- Broadcom gained 0.51% after OpenAI and Broadcom announced Jalapeño, OpenAI’s first custom inference chip.
- Broadcom’s Q3 outlook signals AI chip sales could make up around 54% of total revenue, compared with about 49% in Q2.
- Broadcom’s next hurdle is margin, not demand. CEO Hock Tan said custom AI chip margins are below those of some other chips at the company.
Broadcom Inc. (NASDAQ:AVGO) added $1.92, or 0.51%, to end at $382.07 on Wednesday. The stock had fresh headlines about OpenAI’s in-house chip effort but closed off session highs. Shares touched $388.74 earlier but pulled back by the end of trading. Volume came in at 29.79 million shares, or 114% of the 65-day average, MarketWatch said.
OpenAI and Broadcom rolled out Jalapeño, OpenAI’s debut Intelligence Processor meant for LLM inference. Engineering samples are already running machine-learning jobs in the lab, including GPT-5.3-Codex-Spark, hitting production-level frequency and power, according to the companies. Early testing points to performance per watt beating the present state of the art.
Broadcom CEO Hock Tan said in a release that the chip is set to roll out for deployment by the end of 2026, targeting gigawatt-scale data centers for Microsoft Corp. (NASDAQ:MSFT) and other partners. OpenAI’s hardware chief Richard Ho said Jalapeño was “designed from the ground up for LLM inference.” OpenAI President Greg Brockman said the company is focused on making compute “more abundant.” OpenAI
Mix is the key number for Broadcom holders right now. The company is guiding to $16.0 billion in AI semiconductor sales for Q3, against $29.4 billion in expected total revenue. AI chips would account for about 54% of the total, up from 49% in Q2, when Broadcom reported $10.8 billion in AI chip sales on $22.187 billion total revenue.
Why does it matter? The implied $5.2 billion sequential jump in AI semiconductor revenue is about 72% of Broadcom’s Q2 infrastructure software revenue, which was $7.178 billion. AI isn’t just a growth line for Broadcom. It’s almost the line that will determine if Broadcom’s multiple stays up.
Broadcom could see slimmer margins from its newest AI business. CEO Tan told Reuters that profit margins on custom AI chips run below some other products, like networking switches, since the AI chips rely on large volumes of high-bandwidth memory. SK Hynix Inc. (KRX:000660) and Samsung Electronics Co. (KRX:005930) supply that memory, he said.
Shares moved higher even as tech stocks slipped. The Nasdaq Composite dropped 0.43% and the S&P 500 edged down 0.10%. The Dow finished up 0.35%. Michael Monaghan, partner and portfolio manager at Founder ETFs, told Reuters investors “like the recipients of the spend” in AI but are “punishing those doing the spending.” Reuters
Wall Street isn’t letting up on the stock. Google Finance shows 24 buys and four holds out of 28 analysts covering it, with the average 12-month target set at $513.58, about 34.4% above where shares trade now. William Blair analyst Sebastien Naji kept his buy call on June 24, same as J.P. Morgan’s Harlan Sur, who kept a $580 price target on June 17.
