Breakfast News: AVGO's $10B OpenAI Deal
September 5, 2025
| Thursday's Markets |
|---|
| S&P 500 6,502 (+0.83%) |
| Nasdaq 21,708 (+0.98%) |
| Dow 45,621 (+0.77%) |
| Bitcoin $110,253 (-1.69%) |
1. Broadcom to Co-Design Chip With OpenAI
The FT reports Broadcom (AVGO +0.11%) is set to produce an AI chip with OpenAI, in what would be the first OpenAI specialized chip to run its workloads, in a bid to reduce its reliance on Nvidia (NVDA +1.98%).
- "We now expect the outlook for fiscal 2026 AI revenue to improve significantly": Broadcom CEO Hock Tan didn't explicitly name OpenAI as the mystery customer during the earnings call, but noted a large client committing to $10 billion worth of orders.
- AI-related semiconductor revenue reached $5.2 billion, up 63% year over year: The OpenAI news, along with quarterly revenue coming in ahead of expectations, was enough to push the stock up 4.5% after the closing bell.
2. DOCU and BRZE Soar but LULU Sinks
Stock Advisor recommendation DocuSign (DOCU +0.68%) jumped over 8% following the market closing, thanks to increasing its full-year billings guidance, alongside posting better-than-expected earnings.
- "We have become too predictable within our casual offerings and missed opportunities to create new trends": Lululemon (LULU +0.69%) sank almost 16% after the closing bell following mixed quarterly results that saw U.S. sales disappoint and tariffs eat into profits, with CEO Calvin McDonald wanting more creativity going forward.
- "Our large customer additions were strong, with $500,000+ ARR customers rising 27% year over year to 282": Braze (BRZE +1.67%) rocketed over 15% higher in pre-market trading, as the Rule Breakers rec beat analyst expectations, partly driven by key client wins.
3. Trump Confirms Pending Semiconductor Tariffs
President Trump reconfirmed semiconductor tariffs on imports will be coming soon if production isn't shifted to the U.S., but offered an olive branch by looking to spare companies if domestic U.S. investments are increased.
- "We'll be putting on a fairly substantial tariff": Last month the president referred to a 100% levy, but refused to commit to a specific number, with details on exceptions still remaining unclear.
- "Tim Cook would be in pretty good shape": Speaking about Apple (AAPL 1.21%) CEO Tim Cook, Trump alluded to an exemption, given the recent pledge of spending an extra $100 billion on a U.S. manufacturing idea.
4. August Jobs Data to Guide Fed's Policy
The August jobs report is expected to show a move higher in the unemployment rate from 4.2% to 4.3%, with the headline payrolls print estimated at 75k, in a continued sign of a soft labor market.
- "Tariff policy uncertainty lingers, immigration changes take effect, and AI adoption grows": Eric Teal, CIO at Comerica Wealth Management, presented some of the reasons why the labor market is weakening, with recent data revisions lower not helping.
- Weaker jobs data boost chances of increased interest rate cuts: Investors may find a silver lining in that underwhelming jobs data could see the market price in more interest rate cuts through to the end of the year, offsetting the negative impact.
5. Lambda Plans IPO as AI Boom Continues
According to The Information, AI-infrastructure company Lambda is planning for an upcoming IPO for H1 2026, following in the footsteps of peer CoreWeave (CRWV +8.05%).
- Revenue from cloud services rose 60% in the second quarter: Cloud revenue at Lambda has nearly doubled so far this year, with a gross margin of almost 50%, although a net loss of $24 million shows it's still trying to achieve scale.
- August private funding talks valued the company as high as $5 billion: The potential listing would generate more investor enthusiasm for companies with the computing resources that support AI.
6. Your Take
What quality companies are you watching and waiting to buy at a better valuation, and why? Discuss with friends and family, or become a member to hear what your fellow Fools are saying.
