Macquarie Downgrades Broadcom as Google Reduces Chip Reliance
Macquarie investment bank downgraded Broadcom (AVGO) from Outperform to Neutral and cut its 12-month price target by 15% to $437 per share, citing concerns that key customer Google is increasingly developing its own AI chips and diversifying suppliers.
Key Numbers
Investment bank Macquarie has downgraded Broadcom (AVGO) from Outperform to Neutral, cutting its 12-month price target by 15% to $437 per share from $513, according to a report from Investing.com.
Rating Change
| Item | Before | After |
|---|---|---|
| Rating | Outperform | Neutral |
| Price Target (12-month) | $513 | $437 |
Analyst Rationale
Macquarie analysts believe Google (GOOGL), one of Broadcom's largest customers, is accelerating its in-house AI chip development (e.g., TPUs) and diversifying its supplier base, which could reduce Broadcom's revenue from the data center segment over the long term.
Context
Broadcom's stock has declined about 5% over the past month, while Google's shares rose 3% in the same period. Other analysts remain cautiously optimistic; Morgan Stanley maintains an Overweight rating on Broadcom but recently lowered its price target to $480.
Conclusion
The downgrade reflects growing concerns about key customers developing internal solutions, a structural challenge for Broadcom. However, the company's diversified portfolio in networking and telecommunications may mitigate the impact.
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