Broadcom Is 24% Off Its High and Just Unveiled a Custom AI Chip With OpenAI. Time to Buy the Dip?

Broadcom has dropped 24% from its 52-week high, but the pullback comes amid accelerating AI chip momentum. The company reported Q2 AI chip revenue of $10.8 billion, up 143% year-over-year, and management is projecting over 200% AI revenue growth for the current quarter.

The catalyst: Broadcom and OpenAI just unveiled Jalapeño, a custom AI inference chip designed specifically for OpenAI's workloads. The partnership marks another high-profile custom silicon win for Broadcom, which has built a business designing application-specific chips for hyperscalers.

Valuation has compressed to 19x forward earnings following the selloff, well below the premium multiples commanded during the stock's recent run. The Motley Fool analyst views the dip as buyable at current levels.

Risks remain. Customer concentration is high—Broadcom's custom chip business depends on a handful of large buyers. Custom silicon also carries pricing pressure that commodity AI chips avoid. And AI infrastructure spending, while robust now, remains exposed to macroeconomic volatility and shifting deployment priorities among cloud providers.