Broadcom shares slip after analyst downgrade amid AI chip competition

Broadcom's stock fell about 1% on Tuesday after Austrian bank Erste Group analyst Hans Engel reduced the company's recommendation to "hold" from "buy" and warned that its high valuation could limit upside. The downgrade coincided with a Reuters report that Chinese AI developer DeepSeek is working on its own AI chip, a move that could increase competitive pressure on Broadcom's custom‑chip business.

Erste Group also reaffirmed its hold rating in a separate note, while other analysts maintained bullish stances, setting price targets between $490 and $575. Broadcom reported fourth‑quarter earnings of $2.44 per share, beating estimates, with revenue of $22.19 billion and a net margin of 38.9%. Despite the earnings beat, the downgrade and competition concerns pushed the shares down roughly 1.8% to around $367.

The developments highlight investor focus on Broadcom's valuation, its role in the fast‑growing AI hardware market, and the potential impact of new competitors emerging from China.