MW Here's the latest mystery spooking Broadcom investors - but not analysts
By Britney Nguyen
Broadcom's lack of disclosure around its newest AI customer has investors confused about the company's work with OpenAI
Broadcom's stock was down more than 10% on Friday.
As artificial-intelligence players clamor for more computing capacity, Broadcom's stock has been a big winner this year. But the rally is cooling Friday as Wall Street seeks to better unpack the nuances of its customer momentum.
Heading into Thursday afternoon's earnings report, investors were excited about the budding business relationship between Broadcom $(AVGO)$ and OpenAI. So the company's disclosure of a $73 billion backlog for AI offerings that will be delivered within 18 months "was potentially disappointing given the publicly announced agreement with OpenAI was expected to begin within that time frame and we think is not contributing materially to the figure," according to TD Cowen analyst Joshua Buchalter.
In October, OpenAI and Broadcom announced a deal to design and deploy 10 gigawatts of custom AI chips. The partnership is slated to start in the second half of 2026.
On top of that disappointment, Buchalter said investors were likely made more concerned by Broadcom's announcement of a fifth unnamed customer that it will deliver $1 billion of custom chips to late next year - a timeline that matches up with the start of the OpenAI deployment.
Broadcom's stock is down 10.6% in midday trading Friday and on pace for its worst single-day drop since it lost 17.4% on Jan. 27.
"We think investors believed the fifth customer to be OpenAI; however, a $1 [billion] order would be well below that expected contribution, and thus we think it is not OpenAI," Buchalter said in a Thursday note, adding that Broadcom also likely didn't include the OpenAI deal in its $73 billion backlog.
When prodded on the earnings call, Broadcom CEO Hock Tan didn't offer any details on the identity of the mystery customer. The uncertainty could be stoking a market already worried about OpenAI's position at the nexus of the AI trade because of its $1.4 trillion worth of AI infrastructure deals, including the one with Broadcom.
Buchalter said he doesn't think anything "material has changed" in the relationship between the companies, and that Broadcom is not including the project in its backlog since it's still under development. As the deal progresses, Buchalter said he expects the backlog number "to inflect meaningfully."
See more: Nvidia's stock drops on Google fears. Are investors missing the point?
So who is the mystery customer?
Bank of America analyst Vivek Arya noted on Friday that he thinks it could be Apple $(AAPL)$, which is already "a traditional customer" for Broadcom's connectivity components and chips. Oppenheimer analyst Rick Schafer said in a Friday note that his team thinks the fifth customer could be Elon Musk's startup, xAI, though he did not elaborate further.
On the other hand, Buchalter sees upside for Broadcom from its relationship with Anthropic, which the company confirmed on its earnings call is its fourth custom chip customer. That resolves an older mystery left behind after the previous quarter's report.
Tan said Thursday that Anthropic had added an $11 billion order in the most recent quarter that is expected to be delivered with the first order late next year, and Buchalter thinks the orders are for systems based on Alphabet's tensor processing units that are designed in concert with Broadcom.
"We also sensed incremental confidence on the scope of TPU engagements, both for Google's own use" and for its cloud customers, he said.
Read: Why Broadcom's stock is falling, even as earnings showed strong AI demand
Bernstein analyst Stacy Rasgon said he isn'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."
In his view, investors could be disappointed that Broadcom's non-AI chip business continues "to be weak," while tax rates are rising and its AI revenue "will be somewhat dilutive to overall gross margins given the component pass throughs."
But those worries are missing the point, Rasgon said in a Friday note, as the company looks poised to benefit so long as AI players continue to invest heavily in computing infrastructure.
-Britney Nguyen
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December 12, 2025 12:40 ET (17:40 GMT)
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