Broadcom Pushes VMware Security Upgrades Alongside AI Chip Growth

Broadcom announced substantial updates to its VMware security and networking portfolio on August 6, releasing new versions of vDefend and Avi Load Balancer that add native API protection, on-premises malware sandboxing, and air-gapped deployment support. The releases arrive as the company's custom AI semiconductor business accelerates, creating a two-front expansion that has left investors weighing near-term chip momentum against software durability.

Why it matters

Broadcom's software infrastructure business generates the predictable, high-margin cash flow that balances its concentrated custom chip exposure. These VMware updates signal the company intends to grow both sides simultaneously rather than letting one overshadow the other—a strategy that matters as shares trade roughly 20% below their May peak despite strong chip demand.

Security releases target performance and threat response

The August 6 announcement included vDefend SSP 5.2, vDefend 9.1.1, Avi Load Balancer 32.1.4, and the vACT 3.0 migration tool. Distributed Firewall throughput now reaches up to 75Gbps per 100G NIC server, a 241% increase that scales to 75Tbps across a VMware Cloud Foundation instance. Avi Load Balancer throughput per controller climbs to 12.25Tbps. A new two-node deployment model reduces the hardware footprint required to run vDefend by as much as 33%.

Broadcom positioned the releases as a response to AI-fueled cyberattacks, giving enterprises a technical rationale to expand VMware deployments even as attention centers on the company's chip pipeline.

AI chip revenue climbs sharply

Chief Executive Hock Tan told investors Broadcom's AI semiconductor business will exceed $100 billion in revenue in 2027. The division generated $10.8 billion in the second quarter, up 143% year over year, and the company has guided for more than 200% growth in the current quarter. Total company revenue rose 48% year over year to $22.2 billion in the second quarter, adjusted earnings per share climbed 54% to $2.44, and free cash flow reached $10.3 billion, up 60%.

Alphabet is currently the primary buyer of Broadcom's custom AI chips, with Meta Platforms expected to place larger orders once 2027 arrives. Alphabet's agreement runs through 2031, while Meta's extends through 2029.

Customer concentration remains a concern

The concentration of chip revenue in two hyperscale customers creates execution risk that helps explain why shares fell after the last earnings report despite results that pointed to accelerating AI chip sales. Any disruption to the Alphabet or Meta relationships would affect the stock quickly. Valuation debates hinge on which year of earnings investors use and how much multiple compression they expect once growth normalizes, with estimates varying by billions of dollars depending on small changes in assumptions.

The details were first reported by AI Watch on August 8.