Key Takeaways
- Jay Goldberg at Seaport Research downgraded AVGO to Neutral from Buy amid AI financing worries
- Regulatory filing language suggests Broadcom may participate in funding Anthropic’s data center infrastructure
- Just 3 out of 53 analysts tracked by FactSet maintain neutral stances on the semiconductor stock
- New partnerships with Google and Anthropic were unveiled this week
- The Google partnership extends to 2031, encompassing TPU development and AI networking equipment
When Broadcom unveiled major partnerships with Google and Anthropic this week, Wall Street cheered. Shares surged 6% on Tuesday. However, at least one analyst decided to dig deeper into the details — and what he discovered prompted a change of heart.
Jay Goldberg from Seaport Research downgraded his stance on Broadcom from Buy to Neutral, positioning himself as a contrarian voice. Among the 53 analysts monitoring the stock through FactSet, only three maintain neutral-equivalent recommendations. The remaining 50 analysts continue to express bullish sentiment.
Goldberg isn’t questioning Broadcom’s operational performance. He acknowledges the company’s strength. With approximately 60% revenue expansion expected this year, fueled by robust demand for custom ASIC semiconductors from major clients including Google and Anthropic, the business fundamentals remain solid.
The problem lies elsewhere — specifically in a subtle disclosure within a Broadcom regulatory document. The company revealed that Anthropic will gain access to approximately 3.5 gigawatts of computing infrastructure via Broadcom. Additionally, the filing mentioned ongoing conversations “with certain operational and financial partners” related to this deployment.
This language raised red flags for Goldberg, who interprets it as potential evidence of Broadcom’s involvement in financing Anthropic’s data center construction. “The extent to which all the leading chip vendors are having to provide funding and/or backstops to their customers points to the industry’s strain,” his research note stated.
Neither Broadcom nor Anthropic provided immediate responses to requests for comment.
Semiconductor Giants Face Infrastructure Funding Pressures
Goldberg’s central thesis suggests that Broadcom, Nvidia (NVDA), and AMD (AMD) face a common challenge. Developing gigawatt-scale data centers requires massive capital expenditures, and chip suppliers increasingly find themselves drawn into the financial architecture of these projects.
While he notes Broadcom’s financial exposure appears smaller than Nvidia’s, it nonetheless signals an industry grappling with the extraordinary capital requirements of AI infrastructure expansion.
The Google agreement announced this week involves Broadcom in tensor processing unit development extending through 2031. The company will additionally provide networking infrastructure for Google’s AI rack systems throughout this timeframe.
However, Goldberg highlighted potential competition from Taiwan’s MediaTek, which could capture a portion of the TPU market this year — perhaps not enough to significantly impact Broadcom’s growth, but possibly sufficient to strengthen Google’s bargaining position.
Valuation Concerns Drive Rating Shift
Goldberg’s core message is clear-cut: while Broadcom performs admirably, the share price already incorporates this success. “We see its gains as fully factored into consensus now,” his analysis concluded.
AVGO shares have climbed 114% during the trailing twelve months. Tuesday’s 6% rally following the partnership announcements was followed by another roughly 4% gain in Wednesday’s premarket session, supported by broader market enthusiasm after reports emerged of a potential Iran cease-fire agreement.
