Broadcom shares fell 4.7% in Frankfurt on Friday, tracking a similar drop in U.S. after-hours trading, after the chipmaker forecast first-quarter revenue above Wall Street expectations but warned that profit margins would narrow due to a higher mix of AI-related sales.

The company has expanded aggressively into AI chips, a shift that has heightened investor concerns about profitability and the capital demands of large-scale investments in the sector.

Broadcom holds a $73 billion order backlog expected to ship over the next 18 months, CEO Hock Tan said on a post-earnings call. But an executive cautioned that margins could decline as AI becomes a larger part of the business.