Broadcom’s acquisition of VMware appears to be paying off, as the company has reported significant growth in both its software and semiconductor segments.
For the quarter ending February 2, 2025, Broadcom announced a revenue of $14.92 billion, marking a 25% year-on-year increase. Net income surged by 315% compared to the same period in 2024, reaching $5.5 billion.
The acquisition of VMware, which was completed in 2023, has had a notable impact on Broadcom’s financial performance. VMware’s revenue is now integrated into Broadcom’s infrastructure software division, contributing to a substantial increase in sales. Broadcom’s software division reported $6.7 billion in revenue for Q1 2025, a significant jump from $4.55 billion in Q1 2024. This growth is primarily attributed to VMware, which posted $3.4 billion in revenue in its final quarter as an independent entity.
A key factor in Broadcom’s success has been the shift away from selling VMware’s products as standalone items. Instead, Broadcom now bundles VMware software with additional services, particularly under its Cloud Foundation stack (VCF), which has seen strong adoption. During Broadcom’s earnings call, CEO Hock Tan revealed that approximately 70% of the company’s largest 10,000 customers have adopted the full Cloud Foundation stack. This strategy of upselling customers to higher-value bundles likely explains the revenue boost.
In addition to strong growth in software, Broadcom’s semiconductor business also performed well, with $8.2 billion in revenue, reflecting an 11% year-on-year increase. A significant portion of this growth was driven by AI-related products, which brought in $4.1 billion—up 77% from the previous year. Broadcom has been heavily investing in custom AI silicon for hyperscalers, with CEO Tan noting that the company is working with four hyperscalers to develop custom AI accelerators, an area that continues to see strong demand.
Broadcom’s acquisition of VMware is seen as a key strategic move, allowing the company to expand its software business while continuing to dominate the semiconductor market. While Broadcom has faced challenges, such as potential tariff impacts and competition from companies like Nvidia in the AI space, the overall success of VMware’s integration is clear.
Broadcom is also eyeing continued expansion in the hyperscale sector, with Tan confirming that the company is ramping up production to meet the increasing demand for custom chips designed for AI workloads. Broadcom’s market value has risen as a result of this growth, and analysts continue to view the company as a significant player in the evolving tech landscape.
With input from Bloomberg and the Register.
