Dive Brief:
- VMware revenue grew 13% year over year and total contract value exceeded $9.2 billion during the first quarter of the 2026 fiscal year, Broadcom CEO Hock Tan said during the company’s earnings call Wednesday.
- “We are confident that the growth in generative and agentic AI will create the need for more VMware, not less,” Tan said during the call. Broadcom, which no longer reports VMware revenue separately, saw total Q1 2026 revenue reach $19.3 billion, up 29% from the previous fiscal year.
- VMware Cloud Foundation, the company’s private cloud offering, allows enterprises to scale generative AI workloads and functions as an essential layer between chips and AI software that “cannot be disintermediated or replaced,” Tan said. Broadcom launched an open ecosystem for VCF in November 2025 in a bid to create a private cloud alternative to hyperscalers.
Dive Insight:
Broadcom has indicated steady VMware growth, partly driven by an AI boom across its different business segments.
Broadcom’s Q1 AI semiconductor revenue grew 106% year over year to $8.4 billion, “driven by robust demand for custom AI accelerators and AI networking,” Tan said. The company’s AI networking revenue grew 60% year over year, representing a third of its total AI revenue in Q1, Tan said.
Infrastructure software, the Broadcom segment that includes VMware, saw revenue reach $6.8 billion during the quarter. The 1% year-over-year increase was in line with company guidance, Tan said. Broadcom expects the segment to reach approximately $7.2 billion in Q2 2026, up 9% year over year.
“Let me reinforce that this growth in our infrastructure software business reflects our focus and investments in foundational infrastructure, and our infrastructure software is not disrupted by AI,” Tan said.
The company’s custom accelerator business grew 140% year over year in Q1, with the ramp up of custom AI accelerators progressing across its largest customers including Google, Meta, Anthropic and OpenAI, Tan said. He also alluded to fifth and sixth customers of Broadcom’s custom AI accelerators — XPUs.
“Our collaboration with these six customers to develop AI XPUs is deep, strategic and multiyear,” Tan said.
As Broadcom maintains a “strong outlook for our XPUs,” Tan said the company’s visibility into 2027 has improved.
“We have line of sight to achieve AI revenue from chips — just chips — in excess of $100 billion in 2027,” Tan said. “We have also secured the supply chain required to achieve this.”
