Broadcom stock dips on financing snag in OpenAI chip deal
Updated
Updated · The Information · May 7
Broadcom stock dips on financing snag in OpenAI chip deal
15 articles · Updated · The Information · May 7
Shares fell 2% before partly recovering after Microsoft had not committed to buy about 40% of the processors needed for the initial production phase.
Broadcom will finance that phase only with Microsoft's purchase backing, leaving OpenAI to explore alternative buyers as it seeks custom AI chips to cut reliance on Nvidia.
The uncertainty threatens OpenAI's margin-improvement plans, though Broadcom shares have still doubled over the past year amid strong demand for bespoke AI chip development.
Is OpenAI's chip venture a path to independence or deeper reliance on Microsoft?
With AI's soaring energy demand, will custom chips lower costs or create a new crisis for power grids?
With Nvidia investing in OpenAI, is this custom chip a real threat or a tactic for better GPU prices?
Navigating $17 Billion Cash Burn: OpenAI’s Strategic Shift to Leasing and Custom Hardware with Broadcom
Overview
OpenAI's $18 billion partnership with Broadcom to develop custom AI hardware faced a major financing hurdle in May 2026, threatening the planned deployment schedule from late 2026 to 2029. In response, OpenAI shifted from owning data centers to leasing capacity while intensifying control over hardware design, led by Sachin Katti. This pivot included a key partnership with SoftBank, which finances the Stargate project and supports new data center sites in Texas and beyond, aiming for nearly 7 gigawatts of capacity. Despite these efforts, risks remain around deployment delays, technical challenges with custom chips, and high cash burn. OpenAI's diversified hardware strategy and hybrid infrastructure approach provide resilience, but execution and competition pressures continue to pose significant challenges.