Broadcom CEO Hock Tan says many AI investors have no clue what they are investing in and are acting like they are in a casino, according to Bloomberg

Context

The post does not cite a source; the quotes come from a Bloomberg report on Tan's remarks at an event in Singapore on October 12. Intel CEO Lip Bu Tan also spoke on the panel.

Deep dive

On October 12, unusual_whales posted that Broadcom CEO Hock Tan says some AI investors are betting like they're in a casino, quoting him: A lot of investors have no clue what they are investing in.

Bloomberg reported that Tan said investors in frontier large language models set very extreme expectations only to find out that it's almost like they are in a casino. He also questioned whether businesses are wasting money on AI and the longer term economics of money losing AI labs.

Tan said OpenAI reaching annualized revenue of $50 billion in September points to a viable business model but offers little guarantee of long term profitability, because it is still losing money on training. He said model developers need customers who earn returns from AI, not users wasting money on tokens, comparing it to a child spending $10 of arcade tokens in 10 minutes and learning nothing.

Tan warned that a shortage of capital could become the next constraint on growth. Bloomberg noted that Nvidia backed Firmus Grid withdrew a planned $5.5 billion IPO last week. Intel CEO Lip Bu Tan said hardware will stay in short supply for two to three years and that memory could be among the first segments to lose steam.

What to expect next

Watch whether other chip and cloud executives echo Tan's warning, and whether AI infrastructure IPOs and debt deals keep getting pulled or repriced after Firmus Grid.

Also watch Broadcom's own guidance on custom AI chip orders, since its business depends on the same AI lab spending Tan questioned, and whether OpenAI shows a clearer path to profit. Broadcom's next earnings call is the likely place for Tan to expand on these views.