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$AVGO: Infrastructure Software Revenues Jump 17% — Yet $102.5M VMware Settlement Clouds Outlook

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AVGO

Court: N.D. California

Case: 5:20-cv-02182

Broadcom AVGO reported strong Q3 2025 results, with Infrastructure Software revenue climbing 17% year over year to $6.8B, driven largely by VMware integration. VMware Cloud Foundation 9.0 is gaining traction as enterprises seek private cloud alternatives with AI-ready capabilities, lifting segment margins to 77%. Shares are up 46.2% year-to-date, outperforming peers, though valuation now trades at a forward P/E of 38.4x. Despite momentum, investors face a reminder: VMware recently agreed to a $102.5M securities settlement, underscoring lingering governance concerns.

Key Highlights
  • Infrastructure Software revenue +17% YoY to $6.8B, 43% of total sales.
  • Gross margin expanded 300 bps to 93% post-VMware integration.
  • Operating margin surged to 77%, reflecting scale efficiencies.
  • VMware Cloud Foundation 9.0 positions AVGO for AI/cloud workloads.
  • $102.5M settlement tied to VMware backlog disclosures weighs on AVGO trust.
But Legal Settlement Still Weighs

Timeline Overview

  • Aug 24, 2018 — Class period begins; VMware accused of misleading on sales backlog.
  • 2019–2020 — VMware discloses backlog declines, triggering stock volatility.
  • Feb 27, 2020 — End of alleged misrepresentation period.
  • Oct 4, 2024 — Settlement agreement reached.
  • Mar 17, 2025 — Court approves $102.5M cash settlement.

Allegations Include

  • Misleading statements about unfilled orders and backlog visibility.
  • Concealing revenue timing risks to inflate reported performance.
  • Artificially inflating VMware stock price pre-acquisition.
  • Heightened regulatory scrutiny risk from SEC and investors.

Investor Update

The $102.5M settlement resolved investor claims without admission of wrongdoing but leaves reputational overhang for VMware under Broadcom’s umbrella. For AVGO holders, execution on VMware Cloud Foundation adoption and sustained AI-driven demand will be critical to offset lingering concerns tied to past disclosure practices.

You can check more information about it HERE.

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