Dive Brief:
- Broadcom reaped the rewards of 2025’s AI building boom, as its revenues for AI hardware grew 65% year over year to $20 billion for the 12-month period ending Nov. 2, CEO Hock Tan said Thursday, during a Q4 2025 earnings call. The chipmaker’s semiconductor segment logged more than $11 billion in Q4 revenues, increasing 35% year over year.
- Semiconductors and related hardware accounted for the lion’s share of Broadcom’s 2025 business, despite the company’s $61 billion acquisition of virtualization software vendor VMware two years ago. The hardware segment brought in $37 billion of the company’s $64 billion in FY 2025 revenues, even as non-AI semiconductors growth flattened.
- “AI is sucking the oxygen ... out of enterprise spending elsewhere and hyperscaler spending elsewhere,” Tan said. “We don't see it getting any worse. We don't see it recovering very quickly, with the exception of broadband. That's a simple summary of non-AI.”
Dive Insight:
LLMs have been a boon for Broadcom, adding tens of billions of dollars to the company’s revenue stream in just the last year.
Broadcom inked a $10 billion deal with a model builder in Q3 that Tan revealed to be Anthropic during Thursday’s call. “In this quarter, Q4, we received an additional $11 billion order from the same customer for delivery in late 2026,” he added.
The company expects demand from three large hyperscalers to generate at least $60 billion and as much as $90 billion in annual AI-optimized semiconductor revenue by 2027.
Broadcom also has a multiyear agreement with OpenAI to codevelop AI accelerators and Ethernet hardware. The goal is to deploy 10 gigawatts of AI compute capacity starting in the second half of 2026, per an October announcement.
In total, the company has a $73 billion hardware backlog on the books that it expects to ship over the next year and a half, Tan said.
The VMware integration, which included significant changes to the vendor’s product line, pricing structure and partner ecosystems, was largely an afterthought as Broadcom wrapped up its second year post-acquisition.
The company’s infrastructure software segment saw revenues increase 26% year over year to $27 billion in 2025, driven by “strong adoption of VMware Cloud Foundation,” Tan said. The segment accounted for 42% of fiscal year revenue.
Broadcom shifted the largest 10,000 customers from perpetual licenses to subscription-based VMware Cloud Foundation bundles as of September, Tan said during a Q3 earnings call. Broadcom has shifted its focus to driving consumption of the private cloud offering and is incentivizing its partners to help customers generate value from the VCF 9.0 stack.
