Demand is bursting, yet it also conceals a crisis! Institutional warning: profit margins and financing risks have risen sharply behind the strong growth in AI revenue of Broadcom (AVGO.US)

The Zhitong Finance App learned that Joe Albano of the investment research institute Tech Cache said that as rising parts costs and limited supply are putting pressure on Broadcom (AVGO.US), its strong AI revenue growth is accompanied by growing profit margins and financing concerns.

Joe Albano said that in an environment of limited supply, demand continues to backlog, so it is not surprising that Broadcom extended its performance guidance to fiscal year 2028. Although Broadcom's AI business continues to grow at an accelerated pace, as the cost of DRAM, NAND, and other components rises, the entire AI infrastructure supply chain faces increased pressure, and the company is facing a contraction in profit margins.

He added that Broadcom's performance outlook reflects strong market demand for its customized AI accelerators (XPUs), but he also warned that the broader financing structure behind AI infrastructure construction is worth paying attention to. One of his key concerns is the increasingly interconnected financing models surrounding AI infrastructure. In some financing arrangements, custom chips are used as collateral, and questions how liquid and profitable these assets can be if an AI customer is in financial trouble. Since custom XPUs are designed around specific customer workloads, once removed from the initial application scenario, their value may not easily continue, which means additional risk may arise if the financing environment deteriorates.

While these concerns have arisen, Broadcom is still benefiting from the continued expansion of AI infrastructure spending. Joe Albano's broader view is that investors need to go beyond the superficial indicator of revenue growth and consider whether investing large amounts of capital into AI can ultimately generate sustainable cash flow.

The longer-term question is whether companies that fund AI infrastructure can continue to support such high levels of spending if the expected returns from AI take longer to be realized. As large technology companies and AI labs continue to invest in infrastructure, whether the entire ecosystem can continue to finance these expenses in the coming year may become an even more important issue.

For Broadcom, Joe Albano remains cautious despite strong demand for underlying AI. He said that if financing to support AI infrastructure begins to weaken, the company may face a more difficult environment, especially as market expectations for the arrival of general artificial intelligence (AGI) are further delayed. In his opinion, what needs to be paid attention to in the end is that although Broadcom has strong AI demand, investors must also weigh whether the expenditure and financing cycle that supports this demand can continue.