Broadcom Pushes AI Chip Gains With Software Security Update

Broadcom has emerged as a major beneficiary of enterprise AI buildout in 2026, but the company announced on August 6 that it is not resting on chip revenue alone. The announcement introduced new versions of VMware vDefend and Avi Load Balancer—specifically vDefend SSP 5.2, vDefend 9.1.1, Avi Load Balancer 32.1.4, and the vACT 3.0 migration tool—designed to defend against AI-fueled cyberattacks while scaling infrastructure. The updates add native API protection, on-premises malware sandboxing, and full air-gapped support across distributed and cloud environments. Performance gains are substantial: Distributed Firewall throughput can reach 75Gbps per 100G NIC server (a 241% increase from prior versions) and scale to 75Tbps across a VMware Cloud Foundation instance, while Avi Load Balancer throughput per controller climbs to 12.25Tbps. A new two-node deployment model cuts the hardware footprint needed to run vDefend by as much as 33%, reducing capital requirements for enterprises.

Broadcom's AI chip business remains the headline growth driver, however. CEO Hock Tan has projected that the company's AI semiconductor business will exceed $100 billion in revenue in 2027—a dramatic leap from the $10.8 billion it generated in Q2 2026 alone, which represented 143% year-over-year growth. The company has already guided for more than 200% growth in the current quarter. Alphabet Inc. is currently the primary customer, but Meta Platforms and other major clients are expected to significantly increase orders once 2027 arrives. In the second quarter overall, Broadcom's total company revenue rose 48% year-over-year to $22.2 billion, adjusted earnings per share climbed 54% to $2.44, and free cash flow reached $10.3 billion, up 60%.

Yet investor sentiment remains cautious despite these strong fundamentals. The stock sits roughly 20% below the all-time high it set at the end of May, a pullback that underscores concentration risk: Alphabet and Meta account for the bulk of custom silicon demand today. While both have signed long-term agreements—Meta's contract running through 2029 and Alphabet's through 2031—any disruption to those relationships would quickly ripple through Broadcom's stock price. Valuation debates hinge heavily on which year of earnings investors use as their baseline and how much multiple compression they expect once growth eventually normalizes, with estimates for where the stock could trade in coming years varying by billions of dollars depending on small changes in underlying assumptions. The August 6 software security push appears designed to address that concentration risk by giving enterprises a reason to deepen their VMware footprint even as chip demand grabs the spotlight.