Broadcom (AVGO) and OpenAI unveiled Jalapeño, OpenAI's first custom AI chip designed for large-language-model inference, built by Broadcom in a record nine months from design to tape-out using OpenAI's own AI models. The chip promises substantially better performance per watt than current state-of-the-art, with gigawatt-scale deployment with Microsoft and other partners starting late 2026. This validates Broadcom's ASIC business model, where it co-designs custom chips for single customers. However, positioning data tells a cautious story: Chaikin Money Flow (CMF) for AVGO is -0.006, indicating institutional distribution, while competitors AMD and Micron show positive accumulation (CMF +0.169 and +0.076 respectively). AVGO's relative strength against the SOXX index is 53.6, underperforming the sector. Smart-money perpetual traders have a small net long position in AVGO ($165,000) but a large net short in Nvidia ($14 million). Wall Street analysts remain bullish, with JPMorgan raising its price target to $580, though the stock trades near $390. The key warning is negative institutional money flow; a flip to positive would signal renewed bullish momentum.

Key facts

• OpenAI and Broadcom launched Jalapeño, OpenAI's first custom AI chip, built in nine months.
• The chip offers substantially better performance per watt than current state-of-the-art.
• AVGO's Chaikin Money Flow is negative (-0.006), showing institutional distribution.
• AMD and Micron show positive accumulation (CMF +0.169 and +0.076 respectively).
• Wall Street analysts are bullish; JPMorgan raised AVGO price target to $580.