Broadcom in focus as Rothschild downgrades to Neutral but flags potential upside

What happened

Rothschild & Co. downgraded Broadcom to Neutral, saying earnings quality and durability remain under scrutiny, while acknowledging potential upside if key concerns are resolved. It cut its price target to $398 from $595. Broadcom shares fell more than 6.5% in late-morning trading Friday.

Confirmed

Global impact / market context

The concern links Broadcom’s expected revenue to large computing commitments for OpenAI and Anthropic, while those labs depend heavily on access to credit. If they cannot fund spending or sustain their position, Broadcom’s revenue outlook could face pressure, making investors less willing to value its shares more highly.

Analyst inference

The analyst says Broadcom’s fiscal 2028 guidance is $230 billion in revenue, with up to 15 gigawatts of computing for OpenAI and Anthropic representing a significant portion. Rothschild also points to Google’s customer-owned tools as a risk if other customers adopt similar approaches, potentially limiting Broadcom’s pricing power or growth.

Analyst inference

What to watch

1. Watch whether OpenAI and Anthropic secure lasting access to credit and become self-financing; the analyst says their ability to fund computing commitments matters to Broadcom’s outlook. Analyst inference
2. Track whether Google’s customer-owned tooling spreads to other customers, as Rothschild says wider adoption could weaken confidence in Broadcom’s revenue outlook and share valuation. Analyst inference
3. Note that Rothschild lowered its Broadcom price target to $398 from $595 and downgraded the shares to Neutral, while acknowledging upside may emerge if concerns clear. Confirmed

Evidence

• seekingalpha.com