Key Takeaways
- Jay Goldberg at Seaport Research lowered AVGO from Buy to Neutral over AI sector financing pressures
- A regulatory filing hints Broadcom might participate in funding Anthropic’s data center infrastructure
- Just 3 out of 53 analysts tracked by FactSet now rate the stock as neutral or equivalent
- The chip giant secured major agreements with Google and Anthropic this week
- Broadcom’s Google partnership extends to 2031, covering TPU chips and AI networking gear
Broadcom’s announcement of blockbuster partnerships with Google and Anthropic sent shares soaring 6% on Tuesday. Wall Street cheered the news — but not everyone was celebrating. Seaport Research analyst Jay Goldberg took a closer look at the details and saw red flags.
Goldberg downgraded Broadcom from Buy to Neutral, making him one of the few skeptics on Wall Street. Out of 53 analysts monitored by FactSet, only three now hold neutral or equivalent ratings on AVGO. The remaining 50 maintain bullish stances.
It’s not that Goldberg thinks Broadcom’s fundamentals are weak. He acknowledges the company is performing exceptionally well. Revenue is projected to surge roughly 60% this year, fueled by robust demand for custom ASIC processors from major clients including Google and Anthropic. That’s solid.
What troubles him is a specific disclosure tucked away in a Broadcom regulatory document. The filing revealed that Anthropic will gain access to approximately 3.5 gigawatts of computing power through Broadcom. More tellingly, it mentioned that “the parties are in discussions with certain operational and financial partners” related to this deployment.
Goldberg interprets this language as evidence that Broadcom may be drawn into helping finance Anthropic’s data center expansion. “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,” he noted in his research report.
Neither Broadcom nor Anthropic responded immediately to requests for comment.
Chip Giants Face Infrastructure Financing Crunch
Goldberg’s wider thesis centers on a problem facing the entire semiconductor sector: Broadcom, Nvidia (NVDA), and AMD (AMD) are all confronting the same challenge. Building gigawatt-scale data centers requires massive capital outlays, and chip suppliers are increasingly being dragged into providing financial support for these projects.
While he notes Broadcom’s exposure is smaller than Nvidia’s, it still reflects mounting pressure from the extraordinary capital requirements driving AI infrastructure expansion.
The newly announced Google partnership has Broadcom engaged in tensor processing unit design and production through 2031. The company will also deliver networking hardware for Google’s AI rack systems throughout that timeframe.
However, Goldberg pointed out that Taiwan-based MediaTek might capture a portion of the TPU market this year — not enough to significantly harm Broadcom’s growth, but possibly sufficient to strengthen Google’s bargaining position.
Stock Valuation Reflects Success Already
Goldberg’s core argument is simple: Broadcom is executing well, but the share price has already captured that success. “We see its gains as fully factored into consensus now,” he stated.
AVGO shares have climbed 114% over the trailing twelve months. They jumped 6% Tuesday after the partnership announcements and added another 4% in Wednesday’s premarket session, lifted by broader market strength following news of a potential Iran cease-fire agreement.
