Broadcom CEO Hock Tan told an audience in Singapore on Monday that many people funding the AI boom "have no clue what they are investing in." Tan said some investors have expectations so high that "it's almost like they are in a casino." Broadcom makes chips used in the AI boom. Tan directed the criticism at money flowing into AI laboratories that still lose money building new models.
Bloomberg reported that OpenAI is earning about $50 billion a year at the company's current pace. Tan said that figure proves the business can work, not that the business will be profitable. The same figure sparked fears about OpenAI's revenue gap last week.
Tan said companies are spending money on AI tokens, the units of text for which AI services charge. AI tokens are not crypto tokens. Tan compared enterprise spending to children using $10 of video arcade tokens in 10 minutes without learning anything.
However, Broadcom forecast about $58 billion in AI chip sales for fiscal 2026 in September. Broadcom forecasts roughly $115 billion in AI chip sales in 2027. Broadcom forecasts roughly $230 billion in AI chip sales in 2028. The Standard reported that Tan said demand will exceed supply for at least two more years. Intel CEO Lip-Bu Tan said on the same stage that hardware would remain scarce for two to three years. Hock Tan said money, rather than chips, memory or power, could stop the boom.
Firmus Grid, an Nvidia-backed data center company in Australia, withdrew a planned $5.5 billion share sale. Broadcom shares fell nearly 4% last Thursday during a selloff in AI stocks over OpenAI's revenue. Broadcom shares were down almost 2% at market open. Broadcom shares were trading at $356.28 at the time of publication.
Similar gambling criticisms have been directed at crypto. In February 2023, the late Berkshire Hathaway vice chairman Charlie Munger urged the United States to ban crypto. Munger called crypto "a gambling contract with a nearly 100% edge for the house." UK lawmakers said in 2023 that retail crypto trading "more closely resembles gambling than it does a financial service." The European Central Bank's Fabio Panetta called coins without backing assets "a gamble disguised as an investment asset." India's central bank chief, Shaktikanta Das, likened crypto trading to gambling.