Key Takeaways
- Jay Goldberg at Seaport Research moved AVGO from Buy to Neutral amid AI sector financing pressures
- A regulatory disclosure hints Broadcom might participate in financing Anthropic’s data center infrastructure
- Just 3 out of 53 analysts monitored by FactSet maintain neutral positions on the semiconductor stock
- The company unveiled partnership agreements with Google and Anthropic this week
- Google’s partnership extends until 2031, encompassing TPU collaboration and AI rack hardware
Broadcom’s announcement of dual partnerships with Google and Anthropic sent shares soaring 6% Tuesday. Yet amid the celebration, Seaport Research’s Jay Goldberg took a contrarian stance after scrutinizing the details.
Goldberg downgraded his outlook on Broadcom from Buy to Neutral, positioning himself among a tiny minority of skeptics. Among 53 analysts following the stock through FactSet, only three maintain neutral-equivalent positions. The remaining 50 continue recommending the shares.
His skepticism doesn’t stem from operational weaknesses. Goldberg acknowledges the company’s robust performance. With approximately 60% revenue growth projected for this year, fueled by surging demand for custom ASIC processors from clients including Google and Anthropic, the fundamentals appear solid.
What troubles him is a specific disclosure tucked into a Broadcom regulatory document. The filing revealed Anthropic will utilize approximately 3.5 gigawatts of computing infrastructure through Broadcom. Significantly, it mentioned ongoing conversations with “certain operational and financial partners” regarding this rollout.
Goldberg interprets this language as evidence Broadcom may shoulder financial responsibilities for Anthropic’s data center construction. “The degree to which major chip manufacturers must supply funding and/or guarantees to customers highlights the sector’s stress,” he stated.
Neither Broadcom nor Anthropic provided immediate responses to requests for commentary.
Semiconductor Giants Face Infrastructure Financing Challenge
Goldberg’s wider thesis suggests Broadcom, Nvidia (NVDA), and AMD (AMD) face a common obstacle. Building gigawatt-scale data facilities requires massive capital outlays, and chip suppliers increasingly find themselves drawn into financing arrangements.
While he notes Broadcom’s exposure appears less substantial than Nvidia’s, it nonetheless signals market stress from the extraordinary capital requirements driving AI infrastructure expansion.
The Google arrangement announced this week involves Broadcom contributing to tensor processing unit innovation through 2031. Additionally, Broadcom will deliver networking hardware for Google’s AI rack systems throughout this timeframe.
However, Goldberg highlighted that Taiwan-based MediaTek might capture some TPU opportunities this year — insufficient to significantly impact Broadcom’s growth path, but potentially offering Google additional negotiating power.
Stock Valuation Leaves Little Room for Upside
Goldberg’s assessment is simple: Broadcom performs strongly, but shares already incorporate this reality. “We believe current gains are fully captured in consensus estimates,” he explained.
AVGO has surged 114% during the trailing twelve months. Tuesday’s deal announcements drove shares up 6%, with another roughly 4% gain in Wednesday’s premarket session, supported by broader market enthusiasm following reports of a potential Iran cease-fire agreement.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
