$AVGO: VMware Fuels 17% Infrastructure Software Growth — Yet $102.5M Settlement Overhang Persists

Court: N.D. California

Case: 5:20-cv-02182

Broadcom AVGO reported a strong quarter, with Infrastructure Software revenue up 17% YoY to $6.8B, representing 43% of total sales. Gross margins expanded 300 bps to 93%, while operating margin surged to 77%, boosted by VMware integration. Broadcom now expects AI revenues to climb 66% YoY in Q4 to $6.2B, while semiconductor sales are forecast to rise 30% YoY to $10.7B. Despite momentum, a $102.5M VMware investor settlement remains a legal headwind.

• $6.8B Infrastructure Software revenue, up 17% YoY.
• VMware Cloud Foundation 9.0 launch expected to accelerate adoption.
• 93% segment gross margin (+300 bps YoY).
• 66% YoY AI revenue growth projected for Q4.
• Shares up 46.2% YTD, trading at 38.4x forward P/E vs sector’s 29.45x.
• $102.5M VMware investor settlement continues to weigh on AVGO.

Timeline Overview

• Aug 24, 2018 — Class period begins.
• Feb 27, 2020 — VMware disclosures on sales backlog trigger share declines.
• Mar 23, 2020 — Investors file lawsuit, alleging misrepresentation of unfilled orders.
• Oct 4, 2024 — VMware agrees to settle claims for $102.5M.
• Mar 31, 2025 — Settlement hearing scheduled in N.D. California.

Allegations Include

• Misleading statements about unfilled orders and backlog.
• Violations of disclosure rules, risking regulatory investigation.
• Artificially inflating $VMW share price during class period.
• Concealing demand volatility tied to VMware sales practices.

Investor Update

The $102.5M cash settlement resolved litigation tied to VMware’s reporting of backlog and demand, but underscores governance and disclosure risks. While AVGO benefits from VMware’s integration and surging AI tailwinds, investors must weigh legal liabilities as part of the broader risk profile.

You can check more information about it HERE.