How Broadcom Hit $50 Billion in Revenue and What It Means for AI

Broadcom just announced its results for fiscal 2024: the company hit its $50 billion revenue target, a jump of 40% from the prior year. That kind of growth at a company this size is rare. The engine behind it? Heavy demand for chips that power artificial intelligence, plus the integration of VMware—an enterprise software company Broadcom acquired—into its operations. The combination has transformed Broadcom from a chipmaker into something broader: a semiconductor-and-software infrastructure play.

$10 Billion From AI Chips Alone

Here's the headline that matters if you're trying to understand who wins in the AI buildout: Broadcom pulled in $10 billion in AI-related chip revenue during fiscal 2024. That's real money, and it matters because it shows which companies are actually selling the infrastructure that powers AI systems.

Most of that revenue comes from two sources. First, custom chips—silicon designed specifically for one customer's AI workloads, not mass-market products. Second, networking chips that link together all those AI accelerators inside data centers. Broadcom doesn't make the GPUs everyone talks about, but it makes the glue that holds AI data centers together.

What sets this model apart from competitors is that it relies on long-term partnerships. Once a major tech company like Google or Meta chooses Broadcom's custom silicon, switching costs go up and the deal tends to stay locked in place. That creates more predictable, stable revenue than selling generic chips to the open market. For a company betting on AI, that's valuable.

VMware and the Software Side

When Broadcom bought VMware, it wasn't just bolting on software to a semiconductor business. VMware brought enterprise virtualization—the software layer that lets companies run multiple operating systems on a single server—and cloud management tools. Those assets generated $20 billion in revenue for Broadcom's infrastructure software segment in fiscal 2024.

But here's where the strategy gets more complicated. VMware's customer spending was on track to end fiscal 2024 at roughly $1.4 billion per quarter. Before the acquisition, that figure was around $2.3 billion quarterly. That's a 40% decline—and Broadcom did it deliberately.

The company is focusing VMware's resources on large enterprise customers while stepping back from smaller accounts. Private equity firms used to do this exact playbook: buy a software business, drop unprofitable customers, and squeeze higher margins from the ones you keep. Broadcom is running a similar script. The trade-off is real: less revenue, but higher profit per customer and stickier relationships where switching costs are steep.

This creates an opening for competitors. As Broadcom shrinks VMware's addressable market to focus on the enterprise tier, other virtualization platforms may find it easier to pick up the abandoned mid-market and smaller customers. For the customers Broadcom keeps, though, its pricing power likely gets stronger.

Stock Split: What It Signals (and Doesn't)

During fiscal 2024, Broadcom executed a stock split. Before you assume this means something dramatic, here's what it actually is: a cosmetic change to the number of shares outstanding that has no bearing on what the company is worth or how it performs.

Why do companies do it? In Broadcom's case, management was signaling confidence that the stock would keep appreciating. Lower nominal share prices also attract retail investors and improve trading liquidity. It's a technical adjustment, not a strategic decision—though the timing, coming during strong growth, hints at management's view of the road ahead.

The Bigger Picture

Broadcom has shifted what it is. It's no longer a pure semiconductor company. Half its revenue now comes from software, half from chips. That diversification matters because semiconductor and software businesses run on different cycles and require different skills to manage.

The real question for the next few years isn't whether Broadcom grew fast in 2024—it clearly did. The question is whether it can sustain that growth, especially as VMware's customer base stabilizes and AI chip demand matures. Software businesses are typically more predictable and profitable than chipmaking, but they're also different animals to run.

For investors who want exposure to AI infrastructure, Broadcom offers a different angle than, say, a company making general-purpose AI accelerators. You're betting on custom partnerships and the specialized networking infrastructure that connects AI systems at scale. That model is defensible, but it depends on those partnerships staying in place as the AI industry matures.

How Broadcom Reports Its Numbers

Broadcom publishes two sets of financial results: GAAP figures (what the Securities and Exchange Commission requires) and non-GAAP figures (adjusted numbers that strip out acquisition-related costs and other one-time items). Both matter. The GAAP numbers show the statutory financial picture. The non-GAAP numbers show how management views the underlying business.

VMware now files its own SEC reports as a Broadcom subsidiary, which means you can track both the parent company and the acquired software business if you dig into the filings. That transparency matters.

What Comes Next

The $50 billion revenue milestone validates Broadcom's strategy of combining hardware and software. The $10 billion in AI chip revenue proves the company has real positioning in infrastructure spending. But sustaining 40% growth is hard. Software can help—it's more stable than chips—but only if Broadcom executes the integration well.

For the broader market, Broadcom's success is a reminder that not all AI beneficiaries are obvious. The company getting rich isn't always the one making headlines. Sometimes it's the company making the networking chips and custom silicon that nobody outside the industry talks about.