Broadcom has not only completed its VMware integration ahead of schedule but has also transformed the virtualization giant into a revenue powerhouse, far exceeding expectations.
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VMware’s quarterly costs reduced significantly from $2.4 billion to $1.2 billion.
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Margins improved dramatically, rising from below 30% to 70%.
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Broadcom no longer reports VMware-specific revenue figures.
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CEO Hock Tan highlighted other metrics to showcase VMware's success post-acquisition:
Subscription bookings: Reached $2.7 billion in Q4, up $200 million from Q3.
Processor core sales: Subscriptions covered 21 million cores in Q4, up from 19 million in the previous quarter.
Adoption of VMware Cloud Foundation (VCF): 17 million cores sold for VCF, with 4,500 of Broadcom's top 10,000 VMware customers signing up for the suite.
VMware’s Subscription Growth Accelerates
VMware secured $2.7 billion in subscription bookings for the quarter, up $200 million from Q3, with sales covering 21 million processor cores—an increase from 19 million the prior quarter. Of those, 17 million cores are allocated to VMware Cloud Foundation (VCF), the company’s flagship private cloud suite.
Since the acquisition, 4,500 of Broadcom’s top 10,000 VMware customers have adopted VCF, signaling strong confidence in the platform.
Broadcom’s software division, bolstered by VMware, achieved $21.5 billion in revenue for FY 2024, up from $7.6 billion in FY 2023—a staggering $13.8 billion jump. VMware’s revenue as an independent company last year was $13.4 billion, making it clear that Broadcom’s strategy is driving growth.
AI and Hyperscaler Opportunities Drive Silicon Business
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Broadcom's silicon division achieved strong growth, driven by AI demand.
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Quarterly revenue reached $8.2 billion, a 12% year-over-year increase.
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AI-related sales surged 150% year-over-year to $3.7 billion.
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Non-AI chip revenue declined by 23% but is anticipated to recover in upcoming quarters.
Tan shared ambitious forecasts for hyperscale customers. Three major hyperscalers plan to deploy Broadcom’s XPU accelerators in million-unit clusters by 2027, representing a $60 to $90 billion market opportunity.
Two additional hyperscalers are exploring custom accelerators using Broadcom’s IP, reinforcing the company’s leadership in Ethernet-based solutions over Nvidia’s favored InfiniBand.
Broadcom’s next-gen XPUs, built on a cutting-edge 3nm process, are set to debut in late 2025. Tan positioned these chips as industry-firsts and a key driver of future growth.
Investors React Positively
Broadcom’s financial health remains robust, with Q4 revenue reaching $14 billion—a 51% year-over-year surge—and annual revenue climbing 44% to $51.5 billion.
While net income for the year fell to $5.9 billion, strong free cash flow will be used to reduce VMware acquisition debt.
Tan also hinted at potential software acquisitions, emphasizing that Broadcom is being highly selective in its search for targets.
Investors responded enthusiastically to the news, driving Broadcom’s stock price up 15% in after-hours trading.
The company’s strong performance and strategic positioning in AI and software leave little doubt about its future trajectory.
With VMware thriving under Broadcom’s stewardship and AI innovations pushing the silicon business to new heights, Broadcom appears poised to remain a dominant force across multiple industries.
