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Broadcom Inc. shares declined after a two-year forecast for artificial intelligence chip sales failed to impress investors, a sign it is still in the early stages of challenging Nvidia Corp.’s dominance.

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Though AI-fuelled revenue is soaring, the company is seeing pressure on its gross margins, Bank of America analyst Vivek Arya said in a note. He also expressed concern about Broadcom’s increasing reliance on Anthropic PBC and OpenAI as customers, since they have other chip options available, including Nvidia and Advanced Micro Devices Inc.

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Broadcom is contending with “a more competitive neighbourhood,” he said.

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The stock slid as much as 6.7 per cent to US$342.81 in New York on Thursday, marking its biggest intraday decline in more than two weeks.

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Investors had initially reacted positively to the company’s AI chip forecast, which showed dramatic growth. Sales from that market will double to about US$115 billion in fiscal 2027 and soar to US$230 billion the following year, chief executive Hock Tan said during a conference call Wednesday. The company also is on track to top earnings of US$30 a share in fiscal 2028, outpacing Wall Street estimates.

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Broadcom’s custom AI semiconductor business has benefited from companies like Alphabet Inc.’s Google, OpenAI and Meta Platforms Inc. looking for ways to supplement their Nvidia-made AI chips with additional supply and variation.

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Chatbot makers Anthropic and OpenAI, which are racing to expand their AI infrastructure, have emerged as especially important clients for Broadcom. Anthropic is expected to become the biggest customer for Broadcom’s custom chips in 2027, displacing Google. Tan sees OpenAI becoming the second-biggest client for that business.

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“We have six customers — four of them are just simply going to be huge,” Tan said. Demand for chips is higher than what Broadcom can ship, particularly due to supply shortages, he said.

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The rapid expansion of data centres also has helped lift sales of Broadcom’s networking products. Capital budgets for the top five hyperscalers — a group that includes the biggest operators of data centres — have climbed about 40 per cent to more than US$700 billion, “strengthening demand visibility for custom silicon and networking,” Bloomberg Intelligence analysts Kunjan Sobhani and Oscar Hernandez Tejada said in a note.

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Broadcom’s forecast for the fourth quarter was less impressive when measured against Wall Street estimates. Revenue will be US$34.8 billion in that period, which runs through October, the company said. Though analysts predicted US$35.1 billion on average, some estimates topped US$36 billion, according to data compiled by Bloomberg.

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Already, investors have been skeptical of Broadcom this year. The stock was up 6.1 per cent through Wednesday’s close, a performance that trailed the rallies enjoyed by many chip peers in 2026.