Broadcom Stock Rises On AI-Powered Beat, But VMware-Led Software Growth Slows Sharply

Broadcom’s software business, built around its $69 billion acquisition of VMware, is slowing down.

• Broadcom reported a mere 1% growth in its infrastructure software segment, sharply lower than recent quarters. 
• Broadcom posted strong overall results and issued an upbeat forecast, which lifted its shares in the after-market session.
• Management argued that AI demand would, in fact, boost demand for software required to tie up and run components in modern data centers.

Chipmaker Broadcom, Inc. delivered stellar quarterly results and guidance on Wednesday, driven by strong performance in its AI semiconductor business and progress on key chip partnerships with top customers, including Google and Anthropic. However, results also show that returns from its biggest acquisition to date, which powers the company’s software business, are diminishing. 

Broadcom stunned the industry by buying VMware for $6.9 billion in late 2023, and VMware now forms the bulk of Broadcom’s infrastructure software segment. In the last quarter, Q1 2026, revenue growth from the unit fell to 1%, down from 19.2% in Q4 2025 and 46.7% in Q1 2025.

Note: Read Q4 ‘25 as Q1 ‘26, Q3 ‘25 as Q4 ‘25 and so on.<

Software services’ share of Broadcom’s total revenue fell to 35.2% from 45% a year ago. To be sure, Broadcom’s software segment is a mix of technologies acquired over time. It includes enterprise virtualization and cloud infrastructure software (via VMware), mainframe and DevOps software (from CA Technologies), and enterprise cybersecurity solutions (from Symantec’s enterprise business).

Not Seeing AI Disruption, Software Growth To Bounce Back

The company expects growth to revive, forecasting Q2 sales from the segment to rise 9% to $7.2 billion.

Broadcom gave few details on why that is the case and sought to allay fears of a slowdown amid market concerns that new AI tools might reduce demand for traditional software. 

“Our infrastructure software is not disrupted by AI,” CEO Hock Tan said in Broadcom’s earnings call. “In fact, VMware Cloud Foundation, VCF is the essential software layer in data centers, integrating CPUs, GPUs, storage and networking into a common high-performance private cloud environment… We are confident that the growth in generative and agentic AI will create the need for more VMware not less.”

Upbeat Q1 Results

Broadcom’s overall strong performance, though, was enough to lift investors’ hopes. Revenue in the first-quarter increased 29% to $19.31, inching past estimates of $19.13 billion, and the Q2 revenue forecast of about $22 billion was also higher than what Wall Street analysts had penciled in.

The company said its AI chip revenue would exceed $100 billion in 2027 and also unveiled a new $10 billion share repurchase program.

Broadcom shares were up 5.3% in Wednesday’s after-market session. As of the last close, they have declined 8.3% year-to-date.

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