“Of our 10,000 largest customers, over 87 percent have now adopted VCF [VMware Cloud Foundation],” said Broadcom’s CEO Hock Tan during the company’s Q2 fiscal 2025 earnings report. Here are Tan’s five boldest remarks on VMware, AI and new Tomahawk switches.
Broadcom CEO Hock Tan is bullish about his $60 billion company’s future thanks to momentum with VMware customers, AI semiconductor sales and its new Tomahawk switches.
“Of our 10,000 largest customers, over 87 percent have now adopted VCF [VMware Cloud Foundation],” said Broadcom’s CEO during the company’s fiscal 2025 second quarter financial earnings report on Thursday.
The Palo Alto, Calif.-based company generated a record $15 billion in revenue during the quarter.
[Related: Broadcom Dumps Registered VMware Resellers; ‘Raising The Bar Across The Program,’ Says Channel Chief]
“Our revenue was driven by continued strength in AI semiconductors and the momentum we have achieved in VMware,” said Tan.
CRN breaks down Tan’s five boldest remarks made during the second quarter earnings call around VMware Cloud Foundation momentum, delivering the company’s new Tomahawk 6 switches proof of concepts to customers, and whether potential AI export regulations will impact Broadcom.
Broadcom’s Q2 2025 Earnings Results
Before jumping into Tan’s boldest statement, here’s a quick look at Broadcom’s earnings results. The company’s $15 billion in sales represented a 20 percent increase year over year.
Broadcom’s semiconductor solutions group sales reached $8.4 billion, up 17 percent year over year, which included a 46 percent increase in AI semiconductor revenue.
The company’s infrastructure software revenue climbed 25 percent year over year to $6.6 billion.
Free cash flow hit a record $6.4 billion, up 44 percent year over year.
Here are the five boldest remarks Broadcom’s CEO made during the earnings call.
‘Of Our 10,000 Largest Customers, Over 87 Precent Have Now Adopted VCF’
Second quarter infrastructure software revenue of $6.6 billion was up 25 percent year on year. This growth reflects our success in converting our enterprise customers from perpetual vSphere to the full VCF software stack subscription.
Customers are increasingly turning to VCF to create a modernized private cloud on-prem, which will enable them to repatriate workloads from public clouds while being able to run modern container-based applications and AI applications.
Of our 10,000 largest customers, over 87 percent have now adopted VCF.
The momentum from strong VCF sales over the past eighteen months since the acquisition of VMware has created annual recurring revenue [ARR] growth of double digits in core infrastructure software.
In Q3, we expect infrastructure software revenue to be approximately $6.7 billion, up 16 percent year on year.
‘Tremendous Demand’ For New Tomahawk Switches
There’s extremely strong interest now [for our Tomahawk 6]. We’re not shipping big orders or any orders other than basic proof of concepts out to customers. But there is tremendous demand for this new 102 terabyte-per-second Tomahawk switches.
Our Tomahawk 6 switch represents the next-generation 102.4 terabytes per second switch capacity. Tomahawk 6 enables clusters of more than 100,000 AI accelerators to be deployed in just two tiers instead of three.
This flattening of the AI cluster is huge because it enables much better performance in training next-generation frontier models through lower latency, higher bandwidth, and lower power.
Tan Weighs In On VMware Customer Renewals
(Tan was asked how far along is Broadcom in the process of converting VMware customers to Broadcom’s business model.)
A good way to measure it is most of our VMware contracts are about typically three years.
That was what VMware did before we acquired them and that’s pretty much what we continue to do. Three years is very traditional.
So based on that, the [VMware customer] renewals—we are like two-thirds of the way, more than halfway through the renewals.
We probably have at least another year-plus, maybe a year and a half to go.
Tan Unsure About AI Export Impacts
(Tan was asked if Broadcom expects to be impacted by regulatory export controls on AI.)
Nobody can give anybody comfort in this environment.
Rules are changing quite dramatically as bilateral trade agreements continue to be negotiated in a very, very dynamic environment.
So I’ll be honest, I don’t know.
I know very little about this whole thing about whether there’s any export control, how the export control will take place—we’re still guessing. So I’d rather not answer that because I don’t know.
AI Semiconductor Revenue Momentum
Semiconductor revenue was $8.4 billion, with growth accelerating to 17 percent year on year. Driving this growth was AI semiconductor revenue of over $4.4 billion, which was up 46 percent year on year and continues the trajectory of nine consecutive quarters of strong growth.
Within this, custom AI accelerators grew double digits year on year, while AI networking grew over 70 percent year on year.
AI networking, which is based on Ethernet, was robust and represented 40 percent of our AI revenue. As a standards-based open protocol, Ethernet enables one single fabric for both scale-out and scale-up and remains the preferred choice by our hyperscale customers.
Our networking portfolio of Tomahawk switches, Jericho routers, and NICs is what’s driving our success within AI clusters in hyperscalers.
