Citi Downgrades Nvidia Price Target, Predicting Broadcom’s XPU Could Cost Nvidia $12 Billion in 2026

TradingKey - Shortly after Broadcom (AVGO), the ASIC chip giant, reported strong Q2 earnings, Citi made a rare move by downgrading its price target on Nvidia (NVDA), signaling that Nvidia’s competitive moat may be facing a real challenge from Broadcom.

On Friday, September 5, Broadcom’s stock surged 9.41%, while Nvidia fell 2.70%. This sharp divergence was driven by Broadcom’s strong Q2 results and reports of a “$10 billion order” — likely from OpenAI — which has sparked a reassessment of the ASIC chip market.

Broadly speaking, Nvidia’s GPU chips prioritize flexibility over peak performance, while Broadcom’s ASICs are optimized for specific, high-efficiency tasks. The industry believes that as AI models shift from training to inference, demand for highly specialized chips will grow significantly.

Broadcom’s Q2 results reinforced this outlook, prompting Citi analyst Atif Malik to lower Nvidia’s price target from $210 to $200 in a report on Monday, September 8, though he maintained a “Buy” rating.

Malik noted that Google’s increasingly competitive Tensor Processing Units (TPUs) will intensify pressure on Nvidia from Broadcom, threatening GPU sales. He forecasts that this competition could cost Nvidia $12 billion in revenue in 2026.

Malik wrote:

“We previously expected the AI XPU chip sales to outpace GPU sales in 2026 and view Broadcom’s comments of faster XPU adoption likely driven by Google’s shift in indirectly competing with Nvidia to offer compute capacity to its rivals like Meta, Open AI, and Oracle, a risk we flagged recently.”

However, Citi noted that this estimate excludes the impact of the Chinese market. If Nvidia resumes GPU shipments to China, the region could become a major upside driver for its performance.

According to TradingKey, the average Wall Street analyst price target for Nvidia is $211.165, implying over 26% upside from current levels.