Is Broadcom the First Crack in the AI Bull Market?
AVGO rattles Wall Street… Alphabet’s $80 billion proof point… AI just entered your brokerage account… why the smart money is betting $50 billion on the AI backbone …
As I write Thursday morning, chip stocks are selling off, pulling the AI complex down alongside it.
The culprit: Broadcom (AVGO) reported earnings last night that were, by any objective measure, extraordinary. AI semiconductor revenues climbed 143% year over year, and Q3 guidance calls for $29.4 billion in revenue.
And yet Wall Street is hammering the stock, down 13% as I write.
Why?
Mostly because Broadcom didn’t raise its full-year AI chip guidance. CEO Hock Tan reiterated the existing forecast rather than upgrading it.
Beyond that, the software segment results were light. And Tan said Broadcom would offer “chips only,” rather than the complete integrated AI systems the company had previously said it would provide to customers.
On a stock that had run more than 60% since its late-March low, this was enough to trigger profit-taking – and the ripple has spread to the broader AI trade this morning.
Now, let’s be clear…
The selloff isn’t about Broadcom’s AI business. That business didn’t disappoint – it more than doubled, and AI revenue is expected to triple to $16 billion next quarter. That makes this selloff a valuation story: what happens when a stock priced for perfection only delivers excellence instead.
But that doesn’t mean we can write it off. It prompts a genuine question that all AI investors must answer…
Is this the beginning of growth rates failing to match lofty expectations? Or is the underlying AI buildout powerful enough to keep delivering at the scale the market needs?
To help answer that, let’s rewind to Monday’s news that Alphabet (GOOG) is raising $80 billion – not to survive a downturn, but because the demand for its AI products is outrunning its ability to build the infrastructure to deliver them.
This has massive implications for tomorrow’s AI growth story.
In yesterday’s Digest, I wrote: “If you’re nervous today, listen to your fears – but frame them in facts.”
So, as the AI complex sells off this morning, let’s take our own advice.
A breather or a bust?
As we try to read where we are in this AI bull run – and how much growth remains in front of us – Alphabet’s $80 billion raise is one of the clearest signals we’ve seen. Let’s talk about why.
Every time you ask Gemini a question or run an AI-powered search, that query flows through a data center packed with specialized chips, networking equipment and cooling systems.
Billions of people do this daily. But that’s just consumer-side demand…
On top of that, corporations are paying Google directly to run their AI workloads – customer service systems, coding tools, data pipelines – all of it pulling on the same infrastructure.
Now, is Google making money on all this?
Yes, handsomely.
Google Cloud’s operating margin expanded to nearly 33% last quarter. Search revenue grew 19% as AI features drove queries to all-time highs.
On the consumer side, advertising revenue subsidizes the free users. On the enterprise side, companies are paying directly and profitably. Net income jumped 81% year over year to $62.58 billion.
So, with cash flooding in Google’s front door, why raise $80 billion?
Because it’s winning so fast that even one of the most profitable companies on earth can’t build AI infrastructure quickly enough to keep up with its own demand.
It’s no wonder why, when asked earlier this year what keeps him up at night, CEO Sundar Pichai’s answer was two words: compute capacity.
The only way to solve that is to spend at a scale that even Alphabet’s cash machine can’t fully self-fund.
If you’re worried about an AI bubble, trillion-dollar valuations with nothing underneath, or hype outrunning reality – this is one of the most ringing endorsements of the real thing you’re going to see.
A Wall Street elephant just put $10 billion behind that same conclusion
Our technology investing expert, Luke Lango, editor of Innovation Investor, reported that Berkshire Hathaway just sunk a boatload of money into Google, and their piece of this deal carries significance well beyond Google’s compute capacity problem:
Either Berkshire finally started understanding technology — or they stopped seeing Alphabet’s AI infrastructure buildout as a technology investment and started seeing it as a utility.
Regulated demand. Contracted revenue. Infrastructure moat. Predictable cash flows at scale. The framework Berkshire has used for railroads, energy pipelines, and insurance for decades.
When Berkshire sees utility economics, they write enormous checks.
That $10 billion tells us more about the AI infrastructure thesis than any earnings report could.
But the implications run well beyond Google. Microsoft (MSFT), Amazon (AMZN), Meta (META) and the rest are locked in the same arms race.
If Alphabet is pulling in $80 billion to accelerate, the pressure on everyone else to keep the gas pedal down only intensifies.
Here’s Luke on what that means for investors:
The winners are the chipmakers, memory suppliers, networking vendors, server builders, power providers, cooling companies, and high-beta compute clouds supplying the rails of the AI economy.
Luke has been positioning Innovation Investor subscribers in precisely those names…
And he believes the biggest catalyst for repricing them is still ahead.
OpenAI and Anthropic are on track for what could be the two largest IPOs in American history – reportedly targeting valuations of roughly $1 trillion and $900 billion, respectively.
When those S-1 filings hit, every Wall Street analyst and institutional investor will scramble to identify the AI infrastructure companies supplying, powering and enabling those businesses – many of them will be the same ones benefitting from Google’s AI ramp-up.
Luke calls getting there first the “Pre-IPO Backdoor.”
The historical pattern supports this. When Facebook went public in 2012, the IPO buyers had a rough ride. But a chipmaker supplying the memory behind the data-center buildout that powered the social media boom quietly returned hundreds of percent over the same window. Luke believes that pattern is about to repeat – at a far larger scale.
The window to position ahead of the repricing is now, before the filings arrive.
Luke lays out the full Pre-IPO Backdoor strategy here — including a free ticker that gives ordinary investors exposure to both OpenAI and Anthropic while they’re still private.
Now, as we assess the overall AI trade and future growth rates, the buildout is one thing. But what about the applications?
Get ready for what’s coming…
The age of agentic AI just arrived in your brokerage account
Last week, Robinhood (HOOD) announced two new products: Agentic Trading and an Agentic Credit Card.
The first lets you connect a third-party AI assistant to your brokerage account to execute investing strategies on your behalf – rebalancing your portfolio, monitoring themes, executing trades – with minimal human involvement.
The second lets a separate AI agent hunt for deals and complete purchases using a designated virtual credit card.
In other words, you set the goals, the AI handles the execution.
Robinhood isn’t alone. Google has already launched agentic checkout across Search and Gemini – a live “Buy for me” button that executes purchases directly on merchant websites.
Meanwhile, Amazon’s AI shopping assistant Rufus now serves 300 million users. Etsy (ETSY) and over a million Shopify (SHOP) merchants are live with agentic commerce capabilities.
And that’s just retail…
Gartner projects agentic AI will autonomously resolve 80% of common customer service issues without human intervention by 2029, cutting operational costs by 30%.
The pace of all this is striking. According to research from the Institute of Electrical and Electronics Engineers (IEEE), 96% of global technologists predict that agentic AI development and integration will accelerate through 2026, with many experts expecting near-mass consumer adoption this year.
Here’s TechRadar with the impact:
For consumers, this shift is profound, as autonomous agents begin managing the complexities of personal finance, travel, and household logistics, turning once-manual digital tasks into hands-off, automated experiences.
We’re not talking about a chatbot that answers questions. We’re talking about AI that acts on your behalf, in the real world, right now.
For investors still on the fence about whether AI is real or just hype, this is your answer.
But still, for nervous AI investors watching their portfolio sink into the red today, is there another proof point to calm nerves?
“We’re just rewiring the world”
If Alphabet’s $80 billion raise and Robinhood’s agentic trading accounts didn’t convince you about AI, consider what Brookfield Asset Management (BAM) is doing.
Brookfield built one of the world’s great fortunes on bridges, toll roads, freight railways, and utilities – the unglamorous, load-bearing infrastructure that quietly powers civilization.
It doesn’t chase trends. It doesn’t do hype. It writes enormous checks into assets it expects to collect cash from for decades.
It is now going all-in on AI infrastructure.
The firm is raising $50 billion across a new suite of AI-focused infrastructure funds. Its first major deployment: a $5 billion commitment to install Bloom Energy (BE) fuel cells at AI data centers – with the first project tied to an Oracle (ORCL) data center campus spanning 1,400 acres of New Mexico desert, built to support OpenAI’s compute needs.
Brookfield CEO Bruce Flatt recently summed up the firm’s view at the Milken Institute Global Conference:
We’re just rewiring the world.
This framing should sound familiar…
Earlier in this Digest, Luke noted that Berkshire sees Alphabet’s AI buildout through the lens of utility economics – railroads, pipelines, contracted cash flows.
Brookfield is saying the same thing, just more explicitly.
Its CEO, Connor Teskey, described the strategy as “focused on investing in long-life, critical assets,” betting that well-structured contracts will deliver reliable cash flows for years – regardless of which AI model or platform ultimately wins the race.
And here’s Bloomberg, noting the scope of the growth in the area:
These asset managers are plowing ever-more cash into AI, stepping in to finance deals when banks can’t supply the sheer magnitude of cash needed to construct massive data facilities.
The ever-larger deals are turning infrastructure, once a staid and sleepy corner of finance, into a buzzy space that’s sparking both ebullience and trepidation.
That last point is critical for investors to recognize.
Brookfield and these asset managers at large aren’t betting on OpenAI versus Anthropic, or Nvidia versus the next chipmaker. They’re betting on the physical layer beneath it all – the power, the land, the cooling, the connectivity. That’s a bet that pays off no matter who wins the AI arms race above it.
The scale of the opportunity, in Brookfield’s own assessment: $7 trillion.
Bridges. Toll roads. Freight railways. Now AI data centers…
Brookfield doesn’t do bubbles – it does decades.
The bottom line
Step back from this morning’s selloff for a moment and look at what today’s Digest actually contains.
Three stories. Three different vantage points – a tech giant, a retail brokerage, and a global infrastructure empire. All pointing in the same direction.
Yes, AVGO is down 13% as I write. But Broadcom’s AI revenue more than doubled, and next quarter it’s expected to triple. The stock is being punished for not beating elevated expectations by enough. That’s a very different problem from a broken thesis.
Meanwhile, Alphabet is raising $80 billion because it can’t build AI infrastructure fast enough to meet demand. Berkshire is writing $10 billion checks because it sees utility economics. Brookfield is committing $50 billion because it sees a $7 trillion opportunity. And AI agents are already executing trades and buying groceries on behalf of ordinary consumers.
A stock getting punished for tripling its AI revenue doesn’t change any of that.
As always, factor in valuations, your personal timeline and your own risk tolerance before acting. Smart investing is never one-size-fits-all. But on the foundational questions – is this AI boom real? And can massive growth continue?
The evidence speaks clearly.
Have a good evening,
Jeff Remsburg
(Disclaimer: I own AVGO, GOOGL, AMZN, and MSFT.)
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