STORY: Shares of Broadcom fell more than 11% Friday after the chipmaker warned that growing sales of lower-margin custom AI processors were squeezing profitability.
That sparked worries that the business may be less lucrative.
It comes a day after investor jitters over Big Tech's AI returns were already in focus as Oracle fell about 11% due to high capital spending for a debt-funded AI infrastructure buildout.
High valuations and circular deals - where firms invest in their own customers - have also fanned fears of an AI bubble.
Still, several analysts said the AI potential remains intact, with stocks benefiting from the technology, especially chipmakers, set for big annual gains as the industry spends hundreds of billions of dollars to bring more capacity online.
One analyst told Reuters, "Right now, the spending intentions still seem so big by so many, hitting that panic button is premature."
Despite Broadcom's decline on Friday, its stock is up nearly 70% for the year.
