The takeover of VMware has an effect – thanks to software focus and high margins, Broadcom gains strength. Analysts see great spa potential.
• VMware takeover pays off
• Strategic conversion with hard cuts
• Broadcom share with great potential
With the takeover of VMware, Broadcom not only secured a heavyweight in the software area, but also laid the foundation for further growth. Despite hard cuts – especially for staff – the new strategic orientation has an effect. Analysts therefore see a promising candidate in Broadcom for a continuation of the course rally.
Billion purchase brings massive changes
The semiconductor group Broadcom has cost 61 billion US dollars to buy the software company VMware. In 2023, the Americans got the GO for the transaction – and started directly to adapt their corporate focus. “Broadcom focuses on making corporate customers the creation and modernization of their private and hybrid cloud environments. The focus is on the investment in VMware Cloud Foundation, the software stack, which serves as the basis for private and hybrid clouds. Offer service catalog to modernize and optimize cloud and edge environments. ” The semiconductor manufacturer therefore sought stronger positioning in the software sector. For VMware, this meant: the tightening of the product portfolio, adjustments in the license model and the abolition of unlimited licenses in favor of subscriptions.
For many customers, these measures were associated with resentment because their costs rose. The VMware workforce also felt the consequences of the new owner: locations were closed. The number of employees was reduced by almost 20,000 within two years, more than half of the employees had to go.
Measures lead to success
But the new strategy and orientation have been worth it: The focus on margin-strong software solutions and recurring sales has convinced: Investors were 53.16 US dollars on Nasdaq on May 25, 2022-one day before the official announcement plans for VMware cost. In the meantime, the market value has more than tripled, on April 16, 2025 the share certificate went out of trade at $ 174.61.
The price gains were also the result of the integration of VMware, which led to a strong plus of the software revenue in the overall group: in the first quarter of 2025, sales with infrastructure software rose by $ 6.7 billion per year. The margins also climbed strongly, while an operative margin was generated by 57 percent in the semiconductor business, the software business reached 76 percent. In the second quarter, the software area is expected to grow by 23 percent, and in the semiconductor business Broadcom is aimed at growth of 17 percent. With the margins you can still see room for improvement on the company side.
Broadcom as an alternative to Nvidia?
The business is not only going well in the newly integrated software segment, the US company also knows how to convince in the semiconductor business. For analysts like Jordan Klein from Mazuho, Broadcom is more than an alternative to the AI giant Nvidia. Broadcom is currently “the best of all” among AI chip manufacturers, the expert said recently. Due to its smaller market size, the company could have a “runway for a much higher AI sales expansion”, it is quoted by Marketwatch.
Even the first market observers rehearse the knighthood and trust Broadcom to be able to play a weighty role in the tech sizes on the stock exchange. After the acronym fan was shaped in 2013 to rewrite a group of stocks around Facebook (today Meta), Amazon, Netflix and Alphabet, the Magnificent 7 then on the plan, which consisted of Apple, Microsoft, Amazon, Alphabet, Meta, Tesla and Nvidia. With Batmmaan there is now a new acronym for a group of strong techacties in the starting blocks. Also included: the Mag 7 and Broadcom.
Analysts convinced
For analysts, it does not seem to be an option that Broadcom can keep up with the large tech companies. The majority of them show themselves Bullish for the Broadcom share-out of 25 analysts have given a buy rating on Tipranks 23, only two rates to keep the stock.
The price target also shows that the strategy taken by Broadcom could still catapult the company into significantly higher spheres: average, experts expect a stock value of $ 246.55. This would correspond to a surcharge of around 41.2 percent at the current price level of $ 174.61.
Editor finance.net
By the way: Alphabet A (Ex Google) and other US shares are even tradable at Finance.net Zero until 11 p.m. (without order fees, plus spreads). Open Depot now for free And receive a free stock as a gift.
Selected leverage products on Alphabet A (Ex Google)
With knock-outs, speculative investors can participate disproportionately in price movements. Simply choose the desired lever and we will show you suitable open-end products on Alphabet A (Ex Google)
The lever must be between 2 and 20
Advertising