Wall Street Analyst Recommends Selling Nvidia and Buying Broadcom Amid AI Infrastructure Competition

Jay Goldberg, an analyst at Seaport Research, has issued a contrasting recommendation for two leading artificial intelligence (AI) infrastructure companies. While most Wall Street analysts see both Nvidia (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO) as undervalued, Goldberg advises selling Nvidia and buying Broadcom. His rationale centers on concerns about Nvidia's circular investments and the growing threat from custom silicon alternatives. Nvidia, the dominant supplier of AI accelerator chips and the creator of the widely used CUDA software platform, has seen its median target price of $265 per share imply a 50% upside from its current price of $177. However, Goldberg's sell rating on Nvidia suggests a target price of $140, indicating a 21% downside. He argues that Nvidia's $27 billion in cloud service agreements over six years and $40 billion in equity investments in customers like Anthropic, CoreWeave, and OpenAI could be inflating demand for its products. Goldberg also points to increasing competition from custom silicon, particularly tensor processing units (TPUs) developed by Alphabet's Google and Broadcom. While TPUs have less mature software ecosystems, they offer cost advantages for certain AI workloads. Major customers such as Anthropic, OpenAI, and Meta Platforms already use TPUs, signaling a potential shift in the market. In contrast, Broadcom's median target price of $472.50 per share implies a 50% upside from its current price of $314. Goldberg recommends buying Broadcom despite his target price of $430 being below the Wall Street consensus. The company's leadership in high-speed networking chips and custom AI accelerators positions it as a formidable competitor to Nvidia in the AI infrastructure space. Despite the analyst's bearish stance on Nvidia, the company's recent financial performance remains strong. In the fourth quarter, adjusted earnings rose 82%, with Wall Street projecting annual growth of 53% through fiscal 2027. This has led some to question whether Goldberg's concerns outweigh the company's current momentum.