Broadcom’s AI boom, VMware risk

Broadcom is having two very different years at the same time: its artificial intelligence chip business just hit $8.4 billion in one quarter, while VMware customers are still arguing over licenses, bundles, and whether to leave. Broadcom said on March 5 that artificial intelligence semiconductor revenue rose 106 percent from a year earlier and would reach $10.7 billion in the next quarter. (broadcom.com) That chip surge is coming from custom silicon, which is when a cloud giant pays for a chip built around its own workload instead of buying the same off-the-shelf processor as everyone else. Broadcom told investors it is winning that business in custom artificial intelligence accelerators and the networking gear that ties giant clusters together. (broadcom.com) The backlog number is even bigger than the quarter: reports tied to Broadcom’s March results said the company has about $73 billion of artificial intelligence orders lined up for shipment over the next 18 months. That is why Chief Executive Hock Tan said Broadcom now has line of sight to more than $100 billion in annual artificial intelligence chip revenue in 2027. (markets.financialcontent.com) (cnbc.com) Meta is part of that story because it said in March 2026 that several of its in-house Meta Training and Inference Accelerator chips were built in close partnership with Broadcom. That makes Broadcom less like a brand-name gadget seller and more like the contract architect behind some of the biggest artificial intelligence systems on earth. (theregister.com) VMware is a different business entirely. VMware sells the software layer that lets one physical server act like many separate machines, which is why big companies have used it for years as the operating system of the data center. (broadcom.com) Broadcom finished buying VMware on November 22, 2023, and then rewired how customers pay for it. Perpetual licenses were replaced with subscriptions, old à la carte products were folded into bundles, and partners said minimum core requirements and renewal penalties got tougher. (broadcom.com) (crn.com) Broadcom’s pitch is that this is not shrink-wrap virtualization anymore but a full private-cloud stack called VMware Cloud Foundation, which combines computing, storage, networking, and management into one package. Broadcom said VMware Cloud Foundation 9.0 became generally available on June 17, 2025 as its platform for a “modern private cloud.” (news.broadcom.com) The problem is that many customers do not want the whole bundle when they only need part of it. Rival vendors have spent the last year openly chasing those accounts, with Nutanix saying Broadcom’s VMware changes created a multi-year migration opportunity and continuing to market directly to unhappy VMware shops in 2025 and 2026. (channelfutures.com) (crn.com) The market is also shifting under VMware’s feet because a lot of new artificial intelligence infrastructure is being built closer to bare metal, which means software runs more directly on the server, or on Kubernetes, which is the system companies use to schedule containers across many machines. Nutanix spent this week promoting bare-metal Kubernetes for artificial intelligence workloads while Broadcom is still trying to prove VMware belongs in that architecture. (computerweekly.com) (blogs.vmware.com) So the split inside Broadcom is pretty clean. The semiconductor side is riding a custom-chip boom with giant customers, giant orders, and a 2027 target that would have sounded absurd a year ago, while VMware is still in the slower work of justifying a bigger, pricier bundle in a world where some customers are shopping around and some new artificial intelligence stacks may skip virtualization altogether. (broadcom.com) (theregister.com)