Futurum Group CEO Daniel Newman credited Broadcom Inc. (NASDAQ: AVGO) for the performance of OpenAI’s new Jalapeño AI chip, while warning against labeling the custom silicon an Nvidia Corp (NASDAQ: NVDA) "killer."

Newman made the comments on X after OpenAI published benchmark results for Jalapeño, its first custom inference chip developed with Broadcom. He stated that Broadcom is "likely the reason this went well," though he reserved judgment on the broader silicon program pending external testing.

Benchmark Performance and Efficiency

OpenAI evaluated Jalapeño using InferenceX, a benchmarking platform designed to assess AI inference performance. The company compared the chip against Nvidia’s GB200 and GB300 superchips, which were the top results available at the time.

According to OpenAI, Jalapeño delivered 1.5 to 1.9 times more AI work per watt across GPT-OSS 120B, DeepSeek R1, and Kimi K2.5 1T models. It also achieved 1.7 to 3.6 times lower end-to-end latency.

The chip is designed specifically for AI inference rather than model training. OpenAI plans to begin deploying it in its infrastructure later this year, with production expected to ramp in 2027. The company is also developing second- and third-generation versions.

Skepticism on Nvidia Replacement Narrative

Newman pushed back against the growing narrative that custom chips will immediately displace Nvidia hardware. He described the "$NVDA killer hyperbole" as "exhausting" and called OpenAI’s assertion of "inference supremacy" a "massive claim."

He emphasized the need for external benchmarks before accepting the hype. A key limitation noted is that Jalapeño’s published comparison was against Nvidia’s GB200 and GB300 systems, not the newer Vera Rubin generation.

OpenAI has stated it will continue using Nvidia and other accelerators, suggesting Jalapeño aims to diversify computing infrastructure rather than replace Nvidia hardware immediately.

Market Reaction

Broadcom closed at $356.74, down 0.56% on Tuesday. Its shares were up 0.54% to $358.68 in Wednesday’s premarket trading. According to Benzinga Edge Rankings, AVGO ranks in the 94th percentile for Quality, though its price trend remains negative across short, medium, and long terms.

Broadcom Inc. (NASDAQ: AVGO) shares declined 0.85% to $365.32 during Monday’s premarket trading, mirroring a broader pullback in large-cap technology stocks. Nasdaq futures dropped 0.57% while S&P 500 futures slipped 0.16%, creating headwinds for the semiconductor firm.

The decline reflects cooling risk appetite rather than company-specific news. Broadcom is currently navigating a correction from its June swing high, leaving the stock vulnerable to broader market volatility ahead of its upcoming earnings release.

Technical Position

Broadcom faces technical resistance as it trades 7.8% below its 20-day simple moving average of $396.06 and 6% below its 50-day SMA of $388.50. The shares are also hovering just beneath the critical 200-day SMA level of $369.20. A reclaim of this longer-term average would signal a strengthening trend.

Momentum indicators remain subdued. The moving average convergence divergence (MACD) sits below its signal line with a negative histogram, indicating faded buying pressure. However, the long-term structure remains constructive, with the 50-day SMA holding above the 200-day SMA following a golden cross in April.

Earnings Outlook

Broadcom is scheduled to report earnings on Sept. 2. Wall Street analysts project earnings per share of $3.16 against a year-ago figure of $1.69. Revenue estimates stand at $29.44 billion, compared to $15.95 billion in the prior year period.

The stock currently trades at a price-to-earnings ratio of approximately 61.3, reflecting a premium valuation. The average analyst price forecast is $511.13.

Recent analyst actions include:

• BMO Capital Markets: Initiated coverage with an Outperform rating and a $455 price target.
• Erste Group: Downgraded to Hold on July 7.
• UBS: Maintained Buy rating but lowered price target to $485 on June 4.

What the Numbers Show

Broadcom’s Benzinga Edge scorecard reveals a divergence between business quality and valuation metrics. While the company holds a high Quality score of 95.11, its Value score is just 6.24 and its Growth score stands at 30.68. This profile suggests that despite strong underlying fundamentals, the premium valuation limits near-term growth appeal for value-oriented investors.

ETF Exposure

Broadcom remains a significant holding in major semiconductor ETFs, meaning fund flows can heavily influence share price action:

• Invesco PHLX Semiconductor ETF (SOXQ): 9.94% weighting
• iShares Semiconductor ETF (SOXX): 8.12% weighting
• First Trust NASDAQ Technology Dividend Index Fund (TDIV): 8.05% weighting