Shares of Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) fell after a report that OpenAI is set to produce its first AI chip next year in collaboration with Broadcom (NASDAQ:AVGO).
AMD slumped about 5.5%, while Nvidia’s shares fell nearly 3%. Meanwhile, Broadcom’s stock jumped nearly 10% on Friday.
Broadcom, which reported its third quarter results on Thursday, said it had signed an unnamed fourth customer for its application-specific integrated circuits, or XPUs.
“Now further to these 3 customers, as we had previously mentioned, we have been working with other prospects on their own AI accelerators,” Broadcom’s President and CEO Hock Tan said on the company’s earnings call. “Last quarter, one of these prospects released production orders to Broadcom, and we have accordingly characterized them as a qualified customer for XPUs and, in fact, have secured over $10 billion of orders of AI racks based on our XPUs.”
“And reflecting this, we now expect the outlook for our fiscal 2026 AI revenue to improve significantly from what we had indicated last quarter,” Tan added.
Wall Street analysts were bullish following Broadcom’s surprise announcement.
“AVGO delivered another solid beat-and-raise w/[with] continued custom AI XPU momentum — most notably highlighting $10B+ order from new (4th) customer for inference-focused XPU; accelerating AI growth in FY26 and again in FY27,” said Wells analysts led by Aaron Rakers.
Wells Fargo’s analysts suggested the OpenAI chip would be inference-focused, but Broadcom did not explicitly mention this.
Seeking Alpha has put in a request for comment to Broadcom about the identity of the customer and that they would be used for inferencing.
Meanwhile, Morgan Stanley analysts, led by Joseph Moore, said the “headline grabber will be the addition of a 4th customer for AI ASIC processors, reported in the press as Open AI,” driving a surprising $10B of second half of 2026 revenue.
Tan noted on the earnings call that the company’s XPU business accelerated to 65% of its AI revenue in the third quarter. “Demand for custom AI accelerators from our 3 customers continue to grow as each of them journeys at their own pace towards compute self-sufficiency,” Tan added.
Both Nvidia and AMD provide AI chips to tech companies — including hyperscalers — which use them for both training AI models and inferencing. Nvidia’s latest AI chip technology is based on the Blackwell platform, while AMD’s latest AI chips are the Instinct MI350 series.