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Luke Kawa

Broadcom soars after announcing deal with OpenAI to deploy 10 gigawatts of AI accelerators starting next year

Broadcom is spiking in early trading after the chip designer announced that it’s collaborating with OpenAI to develop and deploy 10 gigawatts of custom AI accelerators for use across data centers.

The companies said these racks and systems will start to be in service in the second half of 2026 and fully completed by the end of 2029.

Broadcom soared during its Q3 earnings call when CEO Hock Tan said the chip designer booked a major new customer that the Financial Times later reported was OpenAI. However, CNBC is reporting that Charlie Kawwas, Ph.D. and president of the semiconductor solutions group for Broadcom, indicated that OpenAI is not that mystery $10 billion buyer.

There were no details on financial terms in today’s press release, though The Wall Street Journal says the new agreement is worth “multiple billions of dollars,” citing people familiar with the matter.

“The racks include Broadcom’s end-to-end portfolio of Ethernet, PCIe and optical connectivity solutions, reaffirming our AI infrastructure portfolio leadership,” said Kawwas in the press release.

“By building our own chip, we can embed what we’ve learned from creating frontier models and products directly into the hardware, unlocking new levels of capability and intelligence,” said Greg Brockman, OpenAI cofounder and president.

The calendar is telling me it’s fall, but it really feels like OpenAI announcement season. Just last week, the ChatGPT developer struck a megadeal that sees it get an up to 10% stake in Advanced Micro Devices, rounding out a series of massive commitments that will require the venture to find (and burn) much more cash.

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Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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