Broadcom’s recent acquisition of VMware seems to be paying off. The company announced that a significant number of its top 10,000 customers have chosen to adopt its Cloud Foundation stack, leading to impressive growth figures.
In its financial results for the quarter ending February 2, Broadcom reported a revenue of $14.92 billion, marking a 25% year-on-year increase. Net income soared to $5.5 billion, an astounding 315% increase compared to the same quarter last year. However, Broadcom no longer separates VMware’s revenue; it’s now part of its infrastructure software unit, which brought in $6.7 billion this quarter, up from $4.55 billion the previous year. Since Broadcom only owned VMware for part of that time, these numbers can be tricky to compare directly.
Before acquiring VMware, Broadcom’s software revenue was lagging, showing only modest growth of 3% in FY 2023 and 4% in FY 2022. In fact, the numbers reflected a jump from $1.97 billion in Q4 2023 to $6.7 billion in Q1 2025, likely due to VMware, which reported $3.4 billion in its last independent quarter. This suggests Broadcom has added about $1 billion in quarterly VMware revenue in just over a year.
How did they achieve this growth? Broadcom shifted away from selling VMware products individually. Now, they only offer bundles, which include software and support, and these bundles come at a higher price compared to previous licensing options. The key offering is the VMware Cloud Foundation (VCF). Broadcom’s CEO, Hock Tan, noted that around 70% of their top 10,000 customers are now using VCF. This upselling likely explains the significant increase in revenue.
In addition, Broadcom has managed to cut costs at VMware, reported an operating margin of 76% for its software business, up from 59% last year. Despite reports of companies moving away from VMware, Broadcom’s strategy appears to be working thus far.
On another note, Broadcom announced that it has engaged two additional unnamed hyperscalers to develop custom AI accelerators, bringing the total to four. Tan shared that they aim to deliver cutting-edge technology, including the industry’s first two-nanometer AI XPU packaging and plans for massive clusters running up to a million accelerators by 2027.
Broadcom’s semiconductor revenue hit $8.2 billion, an 11% year-on-year increase, with $4.1 billion of that from AI-related products—up 77% from last year. This growth was driven by stronger demand for networking solutions to support AI needs.
In addition, Tan suggested in a blog post that the U.S. government should build more VMware-powered private clouds as part of IT modernization. Since acquiring VMware, Broadcom has consolidated 42 data centers into just seven. Regarding government tariffs, Tan mentioned it’s too soon to gauge their effect on the company.
Broadcom’s stock saw a surge following the earnings announcement, rising from around $180 to over $200 but remains lower than early 2025 prices. When asked about possible acquisitions, Tan stated the company is currently focused on AI and VMware, dismissing the idea of further shopping for companies.
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