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

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.

• 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.

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.