Broadcom's VMware Push Takes Aim at Microsoft, Google, & Amazon

Core Viewpoint - Broadcom is significantly focused on its custom AI chips, which are driving its share price, but the company has multiple growth avenues, particularly through its infrastructure software segment, VMware [1][4]. Group 1: Financial Performance - Broadcom's infrastructure software segment experienced revenue growth of 25% in fiscal Q2 and 17% in fiscal Q3 [4]. - The total revenue for Broadcom over the last 12 months was approximately $60 billion, which is a small fraction of the overall cloud computing market [6]. Group 2: Market Opportunities - The combined revenue from cloud service segments of major tech companies like Microsoft, Alphabet, and Amazon reached $270 billion over the past year [5]. - A significant shift towards private cloud adoption is anticipated, with 83% of enterprise Chief Information Officers planning to move some workloads from public to private clouds, up from 43% in 2020 [12]. Group 3: VMware's Role - Broadcom's VMware software aims to enhance the attractiveness of private clouds, providing a unified management solution for private and hybrid cloud infrastructures [8][9]. - The latest VMware update, VCF 9.0, is designed to simplify private cloud management, positioning it as a viable alternative to public cloud services [9]. Group 4: Industry Trends - Rising costs associated with public cloud services are a concern for businesses, with many professionals indicating that cloud costs are too high and lack of visibility hampers their work [10]. - A growing preference for private or hybrid clouds among enterprises building AI models is evident, indicating a potential growth opportunity for VMware [13]. Group 5: Investment Outlook - If a major shift towards private clouds occurs, Broadcom could realize significant advantages, particularly given the substantial revenues generated by public cloud services [14]. - The focus on AI chips may overshadow VMware's potential contributions, which could provide underappreciated upside for Broadcom's stock in the long term [14].