AVGO · Forward model · Infrastructure Software · Bear case
What has to happen in Infrastructure Software
Model as of
This page changes Infrastructure Software inside the complete AVGO model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.
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Infrastructure Software
Basis quarter$8.75B
Final quarter$4.92B
Implied CAGR−11%
Final revenue mix23%
VMware, essentially. A subscription estate being converted from perpetual licences to VMware Cloud Foundation at much higher prices, bolted onto the mainframe and security assets from CA and Symantec. Boring, and the reason Broadcom's cash flow does not swing with the silicon cycle.
Last four quarters
2025 Q4
$6.94B
Reported
2026 Q1
$6.80B
Reported
2026 Q2
$7.18B
Reported
2026 Q3
$8.75B
Reported
VMware Cloud Foundation subscriptionsMainframe software (CA)Enterprise security (Symantec, Carbon Black)Legacy perpetual licence and maintenance runoff
Sequential growth
−0.6%/qtr
decaying toward +2.0%
-0.6% into Q4. Management guides infrastructure software to STABILISE at about $8.7B against $8,752M reported.
Infrastructure Software
Latest: $4.92B (2031Q3E)
| Period | Value |
|---|---|
| 2025Q2 | $6.60B |
| 2025Q3 | $6.79B |
| 2025Q4 | $6.94B |
| 2026Q1 | $6.80B |
| 2026Q2 | $7.18B |
| 2026Q3 | $8.75B |
| 2026Q4E | $8.40B |
| 2027Q1E | $8.09B |
| 2027Q2E | $7.81B |
| 2027Q3E | $7.56B |
| 2027Q4E | $7.33B |
| 2028Q1E | $7.12B |
| 2028Q2E | $6.92B |
| 2028Q3E | $6.73B |
| 2028Q4E | $6.55B |
| 2029Q1E | $6.38B |
| 2029Q2E | $6.21B |
| 2029Q3E | $6.05B |
| 2029Q4E | $5.89B |
| 2030Q1E | $5.74B |
| 2030Q2E | $5.59B |
| 2030Q3E | $5.45B |
| 2030Q4E | $5.31B |
| 2031Q1E | $5.18B |
| 2031Q2E | $5.05B |
| 2031Q3E | $4.92B |
Assumptions & reasoning
- Every actual here is a reported segment figure, taken straight off the face of the earnings release. Nothing in this vertical's revenue history is estimated or apportioned — what is assumed is the cost side, since Broadcom does not publish segment EBITDA or segment capex.
- The model does NOT chase the guided quarter, and this is the one place it deliberately falls short. Total 2026 Q3 revenue is guided to roughly $29.4B and AI to $16.0B; with non-AI semiconductors near $4.5B the residual leaves about $8.9B for software, a 24% sequential jump for a business that grew 1% year over year two quarters ago. This line projects 16% instead, landing near $8.3B, and consolidated revenue therefore comes in about 2% under the guide. Treating part of that step as renewal timing rather than run-rate is a judgement call, and it is stated rather than tuned away.
- The whole growth story is renewal repricing, not new customers. Perpetual VMware licences convert to VCF subscriptions at a large multiple of the old price as each contract comes up, so growth is a function of how much of the estate is still unconverted. That pool is finite, which is why the rate decays to 2% a quarter — roughly 8% a year — rather than holding.
- 82% EBITDA margin, gliding to 80%, is the highest on this page and it is what makes the mix argument work: as AI margin drifts down, software is the ballast. Broadcom does not disclose segment profitability, so this number is calibrated so the three verticals less 4% central overhead reproduce the consolidated 68.7% Adjusted EBITDA margin actually reported in the basis quarter.
- The risk here is churn, and it is not visible in a quarterly revenue line until it is large. Repricing an estate at a multiple of the old cost is a strong incentive for enterprises to migrate to a hyperscaler or to a competing hypervisor; departures show up years later as a renewal that does not happen. The Bear case is where that lives.