Broadcom's stock picks up a rare downgrade. What's behind the contrarian call.

By Emily Bary

An analyst worries about a line from a recent Broadcom filing that suggests the company may be somewhat involved in the funding of an Anthropic data center

Broadcom's stock has more than doubled over the past year, but a Seaport analyst now thinks future gains will be harder to achieve.

Broadcom is coming off new deal announcements with Google and Anthropic that some analysts think will help translate to meaningful financial upside.

But Seaport Research analyst Jay Goldberg bucked the trend, downgrading Broadcom's stock (AVGO) to neutral from buy, citing concerns related to the new arrangements and the general state of the artificial-intelligence-chip market.

He's now in the extreme minority among Wall Street analysts: Just three of the 53 sell-siders tracked by FactSet have neutral-equivalent ratings on Broadcom's stock, while the rest all have bullish stances.

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Broadcom disclosed in a filing that Anthropic will access about 3.5 gigawatts of compute capacity through Broadcom. "In connection with this deployment, the parties are in discussions with certain operational and financial partners," the company continued.

That line stood out as a concern for Goldberg. "We think this confirms reports that Broadcom will have some involvement with the funding of Anthropic's data center," he wrote in his downgrade. "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."

Broadcom and Anthropic didn't immediately respond to MarketWatch's requests for comment.

While Goldberg said Broadcom's business "is still in very good shape," he wondered if the company and other chip makers in the AI ecosystem can scale all their deployments in accordance with previously disclosed timetables.

Broadcom also announced a deal with Google earlier this week. The companies will work together on the development of Google's tensor processing units through 2031, and Broadcom will supply networking and other components for Google AI racks over that multiyear span.

See more: Broadcom's stock is rising. Here's why its new Google and Anthropic deals are so significant.

But Goldberg said Broadcom isn't the only game in town, writing that Taiwanese company MediaTek could pick up some share of the TPU business this year, "not so much to offset Broadcom's wider trajectory, butenough to give Google some piece of negotiating leverage."

Broadcom's stock increased 6% in Tuesday trading after the deal announcements, and it's up another 4% in Wednesday's premarket action, reflecting broad market enthusiasm for the Iran cease-fire deal. Shares have climbed 114% over the past 12 months.

"Broadcom is doing well, but we see its gains as fully factored into consensus now," Goldberg wrote.

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-Emily Bary

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04-08-26 0913ET