AVGO Stock Edges Up Overnight After 10-Year Docomo Deal, But Retail Stays On Edge Over CEO’s AI ‘Casino’ Remarks

• Broadcom announced a 10-year VMware agreement with NTT Docomo.
• The agreement covers software licenses, technical assistance and maintenance support.
• The deal also supports AI workloads and preparations for tech, including 6G.

Shares of Broadcom, Inc. (AVGO) reversed overnight losses to edge up 0.3% late Monday as a 10-year cloud agreement with NTT Docomo did little to ease retail skepticism, with traders seeking a recovery catalyst after CEO Hock Tan’s AI “casino” remarks.

AVGO stock rose nearly 2% on Monday to close at $334.59, snapping three straight sessions of losses. 

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Broadcom Secures 10-Year VMware Deal In Japan

Broadcom extended its 2019 deal with Docomo, in which the companies will align their long-term tech roadmaps to advance the private cloud underpinning the Japanese telecom operator’s digital services. The company called it Broadcom Japan’s first “comprehensive” 10-year agreement covering VMware software licenses, technical assistance and maintenance support. Financial terms were not disclosed.

VMware Cloud Foundation will be at the core of the infrastructure. The deal targets three priorities: keeping services available during system upgrades, strengthening security and resilience, and accelerating the delivery of new services.

Docomo will use the platform to expand capacity and manage traffic spikes, improve security patching and anomaly detection, and run virtual machines and containers on a common platform. Automation across development, testing and releases will help shorten the time needed to introduce new features. The companies also plan to expand AI-driven operations and prepare the infrastructure for future developments, including 6G and IOWN.

CEO’s ‘Casino’ Warning Keeps AI Risks In View

The agreement comes a week after Tan’s comments at a Singapore panel, where he called capital the biggest constraint on further AI development as Broadcom works through wafer and memory shortages.

“A lot of investors have no clue what they're investing in, but set very extreme expectations, only to find out that it's almost like they are in a casino gambling,” Tan said when asked about cheaper AI models, Reuters noted. His remarks addressed investment into the broader AI sector. Tan also acknowledged that Anthropic and OpenAI had shown an ability to generate significant revenue from their latest models deployed for AI personal assistants.

SpaceX and Tesla CEO Elon Musk also subsequently responded, saying, “No crying in the casino,” weighing in on Tan’s concerns about speculative AI investments.

How Do Retail Traders Feel About AVGO?

On Stocktwits, retail sentiment for AVGO slipped to ‘extremely bearish’ at 24/100 — its lowest levels in nearly 18 months — from ‘bearish’ levels a day ago amid a 300% surge in 24-hour message volumes. Retail interest in the stock has been rising, with the ticker’s watcher base up 8% over the past three months. 

One user said, “The biggest problem with this stock is lack Catalysts from Broadcom, the last news was on Oct 13 for VMware HyperArmor. But nothing after it.”  Another user said, “Each time they beat earnings and revenue estimates. Yet here we are down 15% in that time frame.”

A separate user said, “trash news! Still headed lower,” shortly after the Docomo agreement. Other traders were still looking for a bounce. Another user said, “when we sell off early into the session typically we see a nice reversal in overnight session into premarket.”

AVGO stock has declined 3% year-to-date.

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