Broadcom Inc. (AVGO): Business Model Canvas [Dec-2025 Updated]

You're trying to figure out if Broadcom Inc. (AVGO) is a semiconductor play or a software giant, and honestly, the answer is both, which makes their business model canvas compelling. This company is now a dual-engine powerhouse, driving projected 2025 revenue between $47.5 billion and $48.5 billion by pairing custom AI silicon sales with high-margin, recurring infrastructure software, primarily from the massive VMware integration. To be fair, that integration comes with a financial anchor, evidenced by the 87.7% debt-to-equity ratio servicing the deal, so the real question is how their key activities and resources translate that complexity into sustained profit. Dive into the nine blocks below to see exactly how Broadcom Inc. (AVGO) captures value from hyperscalers and large enterprises alike.

Broadcom Inc. (AVGO) - Canvas Business Model: Key Partnerships

You're looking at the core relationships that power Broadcom Inc.'s massive valuation, especially in the AI infrastructure space as of late 2025. These aren't just vendor agreements; they are deep, co-development engagements that lock in future revenue streams.

Co-development with hyperscalers is a huge lever for Broadcom. Take Alphabet, for instance; their decade-long partnership on the Tensor Processing Units (TPUs) remains critical, especially following the launch of Gemini 3 trained entirely on the TPU architecture. Analysts were projecting Broadcom's current average selling prices (ASPs) for these custom chips to be around $5,000-$6,000 per unit, with an expected volume of roughly 2 million units for fiscal year 2025. That volume is expected to climb significantly next year, possibly exceeding 3 million units in 2026, with ASPs potentially hitting $12,000-$15,000 per unit. This custom silicon focus is paying off; Broadcom's AI semiconductor revenue hit $5.2 billion in fiscal Q3 2025, a 63% year-over-year jump. Also, the networking segment, which supports these AI clusters, saw revenue up 170% year-over-year in Q2 2025, making up 40% of the total AI revenue at that time.

The strategic multi-year deal with OpenAI is another cornerstone, formalizing what was hinted at as a $10 billion customer commitment. This landmark collaboration has Broadcom developing and deploying custom AI accelerators and networking systems designed by OpenAI. The sheer scale is impressive: the partnership is set to deploy 10 gigawatts of these custom AI accelerator racks. Deployment is targeted to begin in the second half of 2026 and run through the end of 2029. This single agreement secured over $10 billion in infrastructure orders, solidifying Broadcom's position as a critical enabler for frontier model development.

The foundry relationship, primarily with Taiwan Semiconductor Manufacturing Company (TSMC), is non-negotiable for this advanced silicon. TSMC is the manufacturer for these bespoke chips, including those for OpenAI. This dependence gives TSMC significant leverage; media reports suggest the foundry is expected to raise its prices by between 3% to 10% in 2026. Broadcom's own massive capital expenditure plans are intrinsically tied to securing capacity at leading-edge nodes from partners like TSMC.

When looking at major OEMs, Apple remains a key, albeit shifting, partner for wireless and connectivity components. Reports suggest that the transition to Apple's in-house Wi-Fi chips will impact Broadcom's total revenue by about 4.3% in fiscal 2025, equating to roughly $2.7 billion lost from that specific product line. Still, the RF chip business supplying modems remains strong, contributing 65% of Broadcom's revenue derived specifically from Apple. Furthermore, the opportunity from Apple's custom AI chip development could be substantial, with analysts forecasting an annual revenue potential of $12.5 billion for Broadcom from that segment by 2028.

The integration of VMware, acquired for $69 billion, required a complete overhaul of its system integrators and resellers network. Broadcom is actively streamlining this channel to focus on high-value delivery built around VMware Cloud Foundation (VCF). Here are the key dates for the partner ecosystem shift:

• The White Label Program is set to end on October 31, 2025.
• The old VMware Cloud Service Provider (VCSP) program closes on October 31, 2025.
• The new, invite-only VCSP program begins on November 1, 2025.
• All existing VCSP contracts must transition or end by March 2027 at the latest.

This move is designed to concentrate on a select group of value-based solution providers who are making significant investments in VCF skills. The initial shift to subscription models was estimated to grow Broadcom's VMware revenue from $4.7 billion to $8.5 billion over three years.

Here's a quick look at the massive financial commitments tied to the core AI partnerships:

Finance: draft 13-week cash view by Friday.

Broadcom Inc. (AVGO) - Canvas Business Model: Key Activities

Designing custom AI Application-Specific Integrated Circuits (ASICs/XPUs)

Broadcom Inc. has engaged with three customers who are planning to acquire millions of custom accelerators (XPUs). The company is talking to another four potential customers considering similar purchases. Analysts project Google\'s TPU program will generate over $10 billion in revenue for Broadcom in fiscal year 2025. Broadcom is estimated to have led the 2024 custom ASIC AI accelerator market with $9.0 billion in revenue and a 75% share. The company secured $10 billion in orders for custom AI chips from a fourth client. The AI silicon business growth is predicted to accelerate to 60%.

Integrating and rationalizing acquired software businesses (VMware)

The acquisition of VMware was for approximately $69 billion. Infrastructure software revenue, primarily from VMware, reached $6.596 billion in Q2 2025, a 25% increase year-over-year. For Q1 2025, infrastructure software revenue grew 47% year-over-year to $6.7 billion. Operating margins for the infrastructure software group hit 76% in Q2 2025, up from 60% a year prior. 87% of VMware\'s top 10,000 customers have signed up for the flagship Cloud Foundation (VCF) private cloud bundle. The per-core annual fee for VCF was reduced by 50% to $350 from $700. Transitioning customers from perpetual or standalone licenses saw price hikes ranging from 150% to 1,200%.

Developing high-speed Ethernet networking and optical components

AI-related Ethernet networking revenue is projected to grow at a forward average of over 20% annually. In Q2 2025, AI revenue, which includes networking, grew 46% year-over-year to over $4.4 billion. For Q3 2025, AI revenue accelerated to $5.2 billion, a 63% year-over-year growth. AI now drives over 50.1% of Broadcom Inc.'s Semiconductor revenue in the first half of 2025, up from 37% the previous year.

Managing a complex global supply chain for semiconductor fabrication

The global semiconductor market is expected to reach nearly $697 billion in 2025. The industry allocated around $185 billion in capital expenditures for 2025 alone. Broadcom Inc.'s capital expenditures were $144 million in Q2 2025 and $142 million in Q3 2025. Trade dependencies in the semiconductor value chain have more than doubled between 2012-14 and 2020-22. Securing local production capacity for critical inputs in the United States is estimated to require $9 billion in capital investments.

Maintaining and updating critical enterprise software platforms

The Infrastructure Software segment is projected to account for over 40% of total revenue in Q3 2025. The company is focused on moving clients to subscription models. The license renewal cycle is estimated to last another 18 months.

Here's a quick look at the segment revenue performance for Q2 2025:

The guidance for Q4 FY2025 revenue is approximately $17.4 billion, implying a 24% year-over-year growth.

Broadcom Inc. (AVGO) - Canvas Business Model: Key Resources

You're looking at the core assets that power Broadcom Inc.'s current valuation and future guidance. These aren't just line items; they are the moat.

Extensive Intellectual Property (IP) in high-speed connectivity and custom silicon underpins the Semiconductor Solutions segment, which generated $9.2 billion in revenue for Q3 2025, representing 57% of total revenue. Revenue growth in this segment accelerated to 26% year-on-year, driven by AI demand. The operating margin for Semiconductor Solutions stood at 57% in the quarter.

The VMware Cloud Foundation (VCF) and software portfolio is a high-margin engine. Infrastructure Software revenue hit $6.8 billion in Q3 2025, marking a 17% increase year-on-year. The segment's gross margin was a massive 93%, with an operating margin of approximately 77% for the quarter. This success is reflected in the booking strength, with total contract value booked over $8.4 billion during Q3.

Here's a quick look at the segment performance as of Q3 2025:

Deep, long-term design-win relationships with top hyperscale customers are evident in the AI acceleration. AI semiconductor revenue reached $5.2 billion in Q3 2025, growing 63% year-on-year. This momentum is secured by a growing roster of major AI XPU clients.

The required specialized human capital is significant. The delivery on the VMware promise followed two years of engineering development by over 5,000 developers. This co-design capability is a non-replicable asset.

The financial commitment from customers is formalized in the massive consolidated backlog of over $110 billion as of Q3 2025. This figure locks in future revenue streams across the business.

• Consolidated Backlog (Q3 2025): $110 billion.
• Semiconductor portion of backlog: At least half of the total.
• AI-related backlog: The majority of the semiconductor portion.
• New AI XPU Customer Order Value: Over $10 billion secured for delivery mainly in the second half of fiscal 2026.

The company ended Q3 with $10.7 billion in cash and $66.3 billion in gross principal debt. Free cash flow for the quarter was $7 billion, representing 44% of revenue.

Finance: review the debt maturity schedule against the $110 billion backlog commitment by Monday.

Broadcom Inc. (AVGO) - Canvas Business Model: Value Propositions

You're looking at the core value Broadcom Inc. (AVGO) is delivering to its customers as of late 2025. It's not just about selling chips or software licenses anymore; it's about providing foundational infrastructure for the next wave of enterprise and AI computing.

Custom AI Silicon: Highly specialized, cost-effective XPUs for hyperscale AI workloads

Broadcom Inc. is delivering specialized processing units (XPUs) that are critical for hyperscalers building out massive artificial intelligence (AI) compute clusters. The financial results clearly show this focus is paying off handsomely.

For the full fiscal year 2024, AI revenue hit a record $12.2 billion, which represented a 220 percent year-over-year growth. Looking into fiscal 2025, the momentum continued; AI semiconductor revenue reached over $4.4 billion in the second quarter, marking a 46 percent increase year-over-year. Management guided for AI revenue to accelerate to $5.1 billion in the third quarter of fiscal 2025. More recently, in the quarter ending around September 2025, AI semiconductor revenues were reported at $5.2 billion, up 65 percent year-over-year.

The commitment to next-generation technology is evident, with volume production expected in the second half of fiscal 2025 for chips built on two-nanometer technology.

Hybrid Cloud Management: Unified platform (VCF) to manage AI workloads across private and public clouds

The value here is providing a unified, modern private cloud platform, VMware Cloud Foundation (VCF), that allows enterprises to manage workloads, including AI applications, with IT control and cost efficiency. This is a massive shift from the older perpetual licensing model.

The success of this conversion strategy is quantifiable. As of the second quarter of fiscal 2025, over 87 percent of Broadcom Inc.'s 10,000 largest customers have adopted VCF. Furthermore, customers worldwide have licensed more than 100 million cores of VCF as of August 2025. This migration drove the Infrastructure Software segment revenue to $6.596 billion in Q2 FY2025, a 25 percent increase year-over-year, and to $6.7 billion in Q1 FY2025, up 47 percent year-over-year.

The platform is being positioned as AI-native with the general availability of VCF 9.0 in June 2025, which includes VMware Private AI Services as a standard component.

• VCF Adoption Rate (of top 10,000 customers): 87%+
• VCF Cores Licensed Worldwide: Over 100 million
• Infrastructure Software Revenue (Q2 FY25): $6.596 billion
• Infrastructure Software Revenue YoY Growth (Q1 FY25): 47%

Data Center Connectivity: Industry-leading Ethernet switches (Tomahawk/Jericho) for massive AI clusters

Broadcom Inc.'s networking portfolio, which includes its Ethernet switches, is fundamental to connecting the high-bandwidth infrastructure required for AI clusters. This segment is a major component of the overall Semiconductor Solutions group.

The global Ethernet switch market size was valued at USD 41.80 billion in 2024 and is projected to grow to USD 43.84 billion in 2025. The Ethernet Switch IC market alone was projected to reach $5564 million in 2025. AI networking, which is based on Ethernet, was a strong performer, representing 40 percent of Broadcom Inc.'s AI revenue in Q2 FY2025. The Semiconductor Solutions segment generated $8.408 billion in revenue in Q2 FY2025, up 17 percent year-over-year.

The company is focused on next-generation solutions, such as the Tomahawk 6 switch, to meet hyperscale customer roadmaps aiming for clusters of one million XPUs by 2027.

Security and Observability: Integrated software solutions for enterprise security and network performance

The software offerings, heavily influenced by the VMware integration, provide value through unified management, observability, and security across the enterprise IT estate. This is baked directly into the VCF subscription value proposition.

The introduction of VMware Private AI Services as a standard component of VCF 9.0, which became generally available in June 2025, directly addresses the need for secure AI workload governance on-premises. This includes native AI services like GPU Monitoring and Model Runtime. The overall Infrastructure Software revenue growth reflects the success of pushing these integrated, subscription-based solutions. For instance, in Q2 FY2025, this segment grew 25 percent year-over-year to $6.596 billion.

The company's fiscal year 2024 saw Infrastructure Software revenue reach $21.5 billion, demonstrating the scale of the software business post-acquisition.

• Infrastructure Software Revenue (FY 2024): $21.5 billion
• Infrastructure Software Revenue (Q2 FY25): $6.596 billion
• VCF 9.0 includes Private AI Services for secure workload governance.

Supply Chain Stability: Assured supply of critical components via deep customer ties

Broadcom Inc. offers its hyperscale customers assurance through deep, often multi-year, design-in partnerships for custom silicon and networking gear. This mitigates supply chain risk for the largest AI builders.

The company has partnerships with multiple hyperscale customers for its XPUs, and management flagged a $10 billion AI chip order from a new customer around September 2025. The company also noted ongoing collaboration with Apple Inc. (AAPL). The overall semiconductor business is a record driver, with FY 2024 Semiconductor revenue at $30.1 billion. The company's overall gross profit margin for FY 2024 was 75.4 percent, indicating strong pricing power and cost management across its supply chain.

The company's fiscal year 2024 adjusted EBITDA margin stood at 47.6 percent.

Finance: draft 13-week cash view by Friday.

Broadcom Inc. (AVGO) - Canvas Business Model: Customer Relationships

You're looking at how Broadcom Inc. manages its most critical relationships as of late 2025, which is heavily weighted toward the hyperscale cloud providers driving AI build-out. The company's Q3 2025 results showed a record consolidated revenue of $16 billion, up 22% year-over-year, which clearly reflects the success of these deep customer ties.

Strategic Account Management: Dedicated teams for top-tier hyperscale and enterprise clients.

Broadcom Inc. focuses its top resources on the largest infrastructure spenders, especially those building out AI data centers. This high-touch approach is validated by the sheer scale of their committed business. The company confirmed securing a fourth major hyperscale XPU customer, which brings with it over $10 billion in AI server rack orders. This concentration of large deals means account management teams are deeply embedded with these clients for multi-year planning.

Here's a look at the revenue concentration from the latest reported quarter:

The company's consolidated backlog stood at an extraordinary $110 billion at the end of Q3 2025, which is a direct result of these long-term commitments with key customers. That backlog defintely locks in revenue visibility for the coming years.

Deep Engineering Collaboration: Co-designing custom chips with key customers.

The relationship moves beyond simple supply agreements into true co-development, especially in the custom accelerator (XPU) space. This is where Broadcom Inc. differentiates itself from general-purpose chip suppliers. For instance, the company announced a multi-year partnership with OpenAI in October 2025 to deploy 10 gigawatts of OpenAI-designed AI accelerators. This collaboration involves co-developing systems that include Broadcom's Ethernet and connectivity solutions, with rack deployment targeted to start in the second half of 2026 and complete by the end of 2029.

Other key examples of this deep engineering alignment include:

• Partnering with Meta on chips for its MTIA AI accelerator, with the next-gen 3nm version launching in late 2025 and 2026.
• Extending the relationship with Apple across various areas.
• The AI semiconductor business has seen 10 consecutive quarters of growth as of Q3 2025.

Subscription-Based Support: Moving software customers to recurring, long-term contracts.

The Infrastructure Software segment, significantly bolstered by the VMware acquisition, is the primary vehicle for recurring revenue relationships. This shift to subscription and term-based contracts provides predictable revenue streams, which is reflected in the segment's financial performance. In Q3 2025, this division generated $6.8 billion in revenue, marking a 17% increase year-over-year. Analysts project that for the full fiscal year 2026, AI revenue is expected to account for 53% of total revenue, a significant jump from the 31% share in fiscal year 2025. This indicates that the custom silicon and software subscription growth are the main drivers of future revenue mix.

Direct Sales and Technical Support: High-touch model for complex infrastructure solutions.

The complexity of the custom silicon and large-scale software deployments necessitates a high-touch, direct sales and support model. The company's profitability metrics support the investment required for this structure. For Q3 2025, Broadcom Inc. reported a consolidated gross margin of 78.4% and an operating margin of 65.5%. Furthermore, the company generated $7 billion in free cash flow in Q3 2025, equating to 44% of total revenue, providing ample financial backing for extensive, dedicated customer support teams.

Broadcom Inc. (AVGO) - Canvas Business Model: Channels

The Channels block for Broadcom Inc. reflects a dual-pronged approach, heavily weighted by the high-touch sales for its large semiconductor deals and the newly streamlined, services-focused channel for its infrastructure software, particularly VMware by Broadcom.

Direct Sales Force: Primary channel for large, multi-year semiconductor and software deals.

Broadcom Inc. has strategically focused its direct sales efforts almost exclusively on the largest potential customers in the semiconductor space. The company has all but forsaken smaller market segments to concentrate on hyperscale customers. As of the third quarter of fiscal year 2025, Broadcom Inc. had existing relationships with three of the seven largest cloud and AI service providers. Furthermore, the company recently secured a new, significant engagement, inking a deal worth approximately $10 billion for AI-focused racks powered by its XPUs (custom accelerators). This new engagement brings the total number of major AI XPU customers to four, with management suggesting these four will represent the vast majority of near-term AI XPU growth. This direct channel is crucial for securing the massive, multi-year commitments that underpin the AI semiconductor revenue stream.

Global Distribution Network: For standard semiconductor and broadband products.

For the semiconductor business, which generated $9.17 billion in revenue in Q3 FY2025, representing about 57.5% of the total revenue for that quarter, the reliance on established distribution channels remains significant, though concentrated. Honestly, the dependency on a single entity is stark; one distributor accounts for nearly one-third of all semiconductor sales. This highlights a key leverage point resting with that single distribution partner for the standard and broadband product lines that do not fall under the hyperscale direct sales umbrella. The overall semiconductor segment saw 26% year-over-year revenue growth in Q3 FY2025.

Channel Partners/Resellers: Selling VMware and other infrastructure software to enterprises.

The channel strategy for Infrastructure Software, which brought in $6.8 billion in Q3 FY2025 revenue (up 17% year-over-year), has been completely overhauled following the VMware acquisition. Broadcom Inc. is now explicitly pushing professional services entirely to its channel partners, stating it will no longer offer post-sales consulting, implementation, and deployment services for VMware Cloud Foundation (VCF). The focus is on partners demonstrating real commitment and capability, rewarding value delivered over volume. The partner program was revamped, with a new structure effective November 1, 2025, phasing out legacy tiers. The new structure emphasizes technical expertise for VCF deployment. The partner tiers now include:

• Select tier (requiring 50 points).
• Premier tier (requiring 500 points).
• Pinnacle tier (requiring 2,000 points).

This push is designed to support the migration of Broadcom Inc.'s largest software customers. More than 90% of the top 10,000 VMware accounts have already purchased the VCF subscription bundle, though full deployment is a multi-year process. For some of these customers, the transition has meant significant cost adjustments, with some reports citing bill increases as high as 1,050%.

Cloud Marketplaces: Offering software solutions via major cloud providers.

While direct marketplace revenue figures aren't explicitly broken out, the geographic revenue mix suggests strong Western consumption of the subscription-based software offerings. In fiscal year 2024, the Americas accounted for 29.03% of total revenue, and EMEA for 15.86%. The Infrastructure Software segment, which is heavily subscription-based, is expected to generate $6.7 billion in Q4 FY2025 guidance, representing a 15% year-over-year growth. The company is focusing on helping customers operate private clouds on-premises, which often involves integration and licensing facilitated through major cloud ecosystems, even if the primary consumption model is hybrid or on-prem. The overall strategy is to commoditize the underlying hardware, making the software platform the key value driver delivered through these partner and marketplace routes.

Here's a quick look at the key segment revenue context driving these channel activities as of late 2025:

Broadcom Inc. (AVGO) - Canvas Business Model: Customer Segments

You're looking at the core buyers that fuel Broadcom Inc.'s massive scale, especially now that the Infrastructure Software group, anchored by VMware, is a major revenue driver alongside the AI-fueled semiconductor business. The customer base is highly concentrated at the top end, which is key to understanding their financial stability.

Hyperscale Cloud Providers (CSPs): Primary buyers of AI accelerators and networking.

This segment is the engine for Broadcom's semiconductor acceleration business. The focus here is on custom silicon, or XPUs (eXtended Processing Units), for AI training and inference workloads. Broadcom has successfully locked in major spending commitments from the largest players in the cloud space.

As of the third quarter of fiscal 2025, Broadcom's AI semiconductor revenue reached $5.2 billion, marking a 63% year-over-year increase, and this now represents 33% of the total company revenue. For the fourth quarter of fiscal 2025, management guided AI semiconductor revenue to hit $6.2 billion, which would be a 66% YoY growth.

The concentration of this business is stark:

• Broadcom has existing relationships with three of the seven largest cloud and AI service providers.
• The company recently added a fourth major customer for custom AI accelerators, which has already secured over $10 billion in orders.
• The deal with OpenAI alone is projected to deploy 10 gigawatts (GW) worth of Broadcom's AI accelerators through 2029.
• JPMorgan analysts estimate the OpenAI deal could add between $70 billion to $90 billion in revenue for Broadcom over its tenure.

Broadcom designs these custom AI accelerators for major entities including Alphabet, Meta Platforms, and ByteDance.

Large Enterprise Customers: Users of VMware's virtualization and cloud software.

This segment is defined by the successful, albeit controversial, integration of VMware. The strategy here shifted from selling perpetual licenses to pushing subscription bundles, which significantly boosted the Infrastructure Software segment's revenue and margins.

In fiscal Q3 2025, the Infrastructure Software segment, largely driven by VMware, generated $6.8 billion in revenue, up 17% year-over-year, making up 43% of total revenue. This is a massive jump from before the acquisition, when VMware's quarterly revenue was around $3.4 billion a quarter. The operating margins for this group hit 76% in Q2 2025, up from 60% a year prior.

The conversion success among the largest users is a critical metric:

Management indicated the renewal cycle is more than halfway through, with another 18 months expected to complete the process.

Telecom and Broadband Service Providers: Buyers of connectivity and access chips.

This group remains a steady, though currently less explosive, part of the Semiconductor Solutions business. While AI dominates the headlines, connectivity remains foundational.

For Q3 2025, the non-AI portion of the semiconductor business, which includes these providers, saw revenue of $4 billion, which was flat sequentially. Within this, broadband showed strong sequential growth, but Enterprise networking and server storage were down sequentially. Wireless and industrial segments were flat quarter-on-quarter in Q3 2025.

Original Equipment Manufacturers (OEMs): Customers for wireless and storage components.

OEMs are served through various connectivity, storage, and wireless components within the Semiconductor Solutions segment. While specific revenue attribution to OEMs isn't broken out separately from the broader semiconductor categories, their demand influences the overall health of the non-AI chip business.

Overall Semiconductor Solutions revenue in Q3 2025 was $9.2 billion. The Q4 2025 forecast for total semiconductor revenue is $10.7 billion.

Here's how the overall semiconductor business performed leading into late 2025:

• Q2 2025 Semiconductor Revenue: $8.4 billion, up 17% YoY.
• Q2 2025 AI Semiconductor Revenue: $4.4 billion, up 46% YoY.
• FY 2024 Total Revenue for Broadcom Inc. was $51.57 billion.

Finance: draft 13-week cash view by Friday.

Broadcom Inc. (AVGO) - Canvas Business Model: Cost Structure

You're looking at the major drains on Broadcom Inc.'s bottom line as of late 2025, which is a mix of heavy capital expenditure for leading-edge tech and the lingering financial structure from that massive software buy. The cost structure is dominated by a few key areas, reflecting the dual nature of the business: high-volume, high-cost semiconductor manufacturing and the high fixed-cost base of the acquired software business.

Cost of Goods Sold (COGS)

The Cost of Goods Sold reflects the variable expense tied directly to producing the chips and software licenses/support. For the semiconductor side, this means significant outlay for advanced wafer fabrication, which is inherently costly at the leading edge of process technology.

Here are some of the reported costs for the period ending late 2025:

To be fair, the gross margin reported for the TTM ending July 31, 2025, was around 62.9%, which is lower than the 70% mentioned in one analysis, showing the pressure from the semiconductor mix.

Research & Development (R&D)

Broadcom Inc. must pour capital into R&D to stay ahead, especially with competitors pushing new nodes. This investment is crucial for maintaining the high-value proposition in custom AI accelerators and networking silicon. The commitment to next-generation technology, like the 3-nanometer process, translates directly into these large, ongoing expenses.

The R&D spend shows a clear upward trend:

• R&D Expense for the twelve months ending July 31, 2025, was $10.230B.
• This represented a 20.86% increase year-over-year for that TTM period.
• R&D expense in Q3 Fiscal Year 2025 was $3,050 million.

That's a lot of cash going toward future silicon, which is a necessary cost of staying in the high-end market.

Interest Expense

Servicing the debt from the $69 billion VMware acquisition is a major, non-variable cost component. While the company has been deleveraging, the interest payments remain substantial.

You'll see the impact clearly in the interest expense line:

• Interest Expense for the TTM ending August 3, 2025, totaled $2,449 million.
• The quarterly interest expense for Q3 Fiscal Year 2025 was $807 million.
• The prompt mentions a D/E ratio of 87.7%; however, the latest reported real-life D/E ratio as of December 2, 2025, was 0.88.
• One recent report noted the company held debt of $40.5 billion against $11.1 billion in cash at the end of the latest quarter.

The company's debt load is definitely heavy, even if the D/E ratio is improving.

Sales, General, and Administrative (SG&A)

SG&A is where Broadcom Inc. aims for operating leverage, meaning revenue growth should outpace SG&A growth. This category includes the costs to sell the products and run the corporate infrastructure, which has expanded with the software segment.

Here's how SG&A has tracked:

The TTM figure of $4.114B shows a slight decline, which helps operating leverage, especially when compared to the massive jump seen in the prior year due to the software integration.

Finance: draft 13-week cash view by Friday.

Broadcom Inc. (AVGO) - Canvas Business Model: Revenue Streams

You're looking at the revenue engine for Broadcom Inc. as of late 2025, which is heavily weighted toward high-growth areas like AI and the recurring nature of its acquired software business. Here's the quick math on the Q3 2025 performance that sets the stage.

The Infrastructure Software segment, anchored by the VMware integration, provides a solid, predictable base. This recurring revenue stream was reported at $6.8 billion for the third quarter of fiscal year 2025, showing a year-over-year increase of 17%.

The growth driver remains the Semiconductor Solutions segment, which generated total revenue of $9.17 billion in Q3 2025. Within that, the AI-focused products are seeing explosive demand.

Here is the breakdown of the key revenue components from the third quarter of fiscal year 2025:

The Non-AI Semiconductor Sales revenue, which covers broadband, wireless, and storage products, is the remainder of the Semiconductor Solutions segment after accounting for AI revenue. Based on the total Semiconductor Solutions revenue of $9.17 billion and AI revenue of $5.2 billion, the non-AI portion is approximately $3.97 billion.

The Infrastructure Software revenue stream is increasingly subscription-based, but it still includes older revenue types. You should expect to see revenue generated from:

• Infrastructure Software Subscriptions: Recurring revenue from VMware and other software, totaling $6.8 billion in Q3 2025.
• Software Licensing and Maintenance Fees: Legacy revenue from non-subscription software contracts.

The company's overall financial health reflects this mix, with total consolidated revenue hitting a record $15.952 billion in Q3 2025. This resulted in an Adjusted EBITDA of $10.702 billion, representing 67% of revenue.

For the next quarter, Q4 2025 guidance projects AI semiconductor revenue to climb further to approximately $6.2 billion. The Infrastructure Software revenue for Q4 is projected to be about $6.7 billion.