Lands a fourth giant customer for bespoke AI accelerators
Broadcom has impressed investors by posting record revenues but admitted it has sold a lot of shelfware to VMware customers.
The chips-and-code company on Thursday announced Q3 2025 saw it win $15.95 billion of revenue and $4.1 billion of net income. Revenue bounced 22 percent year on year, and net income surged by 2,284 percent – a huge turnaround that reflects a paper loss for the same quarter in 2024 rather than any dramatic improvement in the company’s affairs.
Revenue from semiconductors rose 26 percent year over year to reach $9.2 billion, while infrastructure software sales rose 17 percent to reach $6.8 billion. Quarter-on-quarter growth from software was slower – sales rose just under $200 million – but it still looks like Broadcom has increased annual revenue from VMware by around $4 billion.
VMware is therefore paying off for Broadcom. Whether it’s paying off for customers is another matter, because on Broadcom’s earnings call CEO Hock Tan said that while the company’s top 10,000 customers have acquired VMware’s flagship Cloud Foundation (VCF) stack, not all have implemented it.
Tan said 90 percent of the large customers have subscribed to VCF but admitted they’ve not always put it into production. As VCF is a bundle of many products needed to create a private cloud, and many VMware customers used only some of those products, it appears Broadcom has sold a lot of shelfware.
“I'm careful about choice of words, because we have sold them on it and they bought licenses to deploy it, it doesn't mean they are fully deployed,” Tan said. “Here comes the other part of our work, which is to take these 10,000 customers or a big chunk of them who have bought the vision of a private cloud on-prem and working with them to enable them to deploy it and operate it successfully on their infrastructure and on-prem,” he added.
“That's the hard work over the next two years that we see happening.”
Tan said that if Broadcom can convince buyers who subscribed to VCF to implement it, further growth will follow as its sells what VMware calls “advanced services” – security, disaster recovery, and AI – to run on VCF.
“All that is very exciting,” Tan said, before expressing enthusiasm for a new VCF sales push into midsized users.
“We see the top 10,000 as being people where it makes a lot of sense, [because they will] derive a lot of value in deploying private cloud using VCF. We now are looking at whether the next 20,000, 30,000 midsized companies see it the same way. Stay tuned. I'll let you know.”
VMware’s rivals will find Tan’s remarks pleasing, as many believe customers subscribed to VCF to buy time in which to plan a migration to an alternative platform.
Semiconductor sales
On the semiconductor side of the business, Tan pointed to $5.2 billion of revenue from chips related to AI, and 63 percent year-on-year growth in the sector. XPUs, Broadcom’s term for AI accelerators, account for 65 percent of that revenue.
Broadcom has signed XPU deals with three hyperscalers and Tan said their demand for the accelerators “continue[s] to grow as each of them journeys at their own pace towards compute self-sufficiency. And progressively, we continue to gain share with these customers.”
Which is perhaps not great news for the other leading AI chip vendors Nvidia and AMD. Not is the fact that Broadcom landed a fourth large XPU customer in Q3 and continues talks with another three.
Chips for applications other than AI didn’t fare as well, leaving revenue flat overall after broadband chips did well, offsetting falls in revenue from enterprise networking and storage. Wireless and industrial chips stayed steady.
Broadcom predicted Q4 revenue will reach approximately $17.4 billion.
Investors liked what they heard, sending Broadcom shares up 4.5 percent to over $320 apiece in after hours trading. ®