By Hamza Faisal

Broadcom shares slid on Friday after Rothschild & Co Redburn downgraded the chipmaker, warning that the company's growing role as banker to its biggest artificial intelligence customers has become a risk in its own right.

The stock fell as much as 7.3% during the session before closing down 4.8% at $347.01. Analyst Mike Harrison cut his rating to Neutral from Buy and slashed his price target to $398 from $595, a reduction of about a third.

A $43 billion backstop

At the heart of the downgrade is Broadcom's financing for Anthropic, the AI lab behind Claude. Broadcom backs a $63 billion vehicle that buys its AI racks and leases them to Anthropic. If Anthropic were to default and the racks sold for less than 72.5% of what was still owed on the lease, Broadcom would cover the difference, up to about $43 billion at peak.

An earlier financing arrangement adds up to about $29 billion more, taking the combined maximum support to roughly $72 billion. That is a large sum next to the $24 billion of cash Broadcom held on August 2. Broadcom has said it considers a payout unlikely, and the two maximums may never peak at the same time.

The company has also provided up to $50 billion in financing guarantees to help OpenAI buy its chips, according to the same analysis.

Customer concentration

Harrison's wider worry is concentration. Broadcom expects Anthropic to become its largest custom-chip customer in 2027, with OpenAI its second-largest in 2028. If one of those labs were to stumble, Broadcom could lose its fastest-growing business and pay out on its guarantees in the same year.

The downgrade also flagged competition from in-house chip efforts at Alphabet, where Google is doing more of its own silicon work. Broadcom has some cover there: its supply deal for the networking in Google's next-generation AI racks runs through 2031.

Chief executive Hock Tan has defended the financing arrangements, arguing that each gigawatt of compute deployed by these customers could generate about $30 billion a year in recurring revenue for Broadcom.

Wall Street is split

Redburn's view is far from the consensus. Analysts' average price target for Broadcom is $533, about 46% above the November 12 close of $364.36, and the stock was already trading 24% below its June 2 closing high before Friday's drop. Redburn's own $398 target still sits 9% above that close.

The next test comes on December 9, when Broadcom reports fourth-quarter and full-year 2026 results after the market close, alongside a business outlook. Until then, the question hanging over the AI trade is the one Redburn has put in writing: whether the customers buying the chips can afford to keep paying for them.

By Hamza Faisal