Broadcom’s Custom AI Chip Momentum and VMware Cloud Win Face Test from EU and US Regulatory Probes
Published on 07/17/2026 at 02:55 | Redaktion boerse-global.de
Broadcom finds itself straddling two very different storylines. On one side, the company is riding a wave of surging AI-chip revenue and a high-profile cloud migration contract with Standard Chartered. On the other, it faces intensifying regulatory scrutiny in Europe and the United States over its VMware business, just as the broader semiconductor sector gets caught in a rotation out of tech stocks. The stock has reacted accordingly, sliding roughly 5% on Thursday to close at $374.45 on the Nasdaq, with the weekly loss widening to 6.49%.
The sell-off was sector-wide rather than company-specific, triggered by Taiwan Semiconductor Manufacturing Company’s latest guidance. Though TSMC reported record quarterly numbers, it raised its 2026 capital expenditure forecast to between $60 billion and $64 billion from a prior $52 billion to $56 billion while trimming third-quarter margin guidance by 70 basis points. Investors took the combination as a warning that rising costs could ripple through the entire chip supply chain. The Philadelphia Semiconductor Index fell about 3%, with Nvidia, AMD, and memory-chip makers SK Hynix, Micron and SanDisk all sliding — the latter group by double-digit percentages. A Bank of America fund-manager survey indicated that while many investors have trimmed tech positions, few are actually shorting semiconductor stocks, which remain the most crowded trade in the market.
AI Chip Business Fires on All Cylinders
Beneath the macro noise, Broadcom’s custom-silicon operations continue to gather pace. Revenue from AI chips jumped 143% in the second quarter and now accounts for 49% of total group sales. The backlog for AI semiconductors exceeds $30 billion, with only $10.8 billion shipped so far — providing substantial visibility for coming quarters. The company has also secured a multiyear chip partnership with Apple that runs through 2031, covering wireless and Bluetooth radio-frequency chips and valued at over $30 billion. StockStory estimates that deal alone will underpin roughly one-fifth of Broadcom’s total revenue.
The long-term outlook has analysts largely bullish. Morgan Stanley’s Joseph Moore reiterated an overweight rating and a price target of $502, calling Broadcom a “core AI winner” and noting that hyperscalers are increasingly shifting budgets from standard GPUs to custom inference chips — a trend that directly benefits Broadcom’s application-specific integrated circuit (ASIC) business. The broader analyst consensus on TradingKey stands at $510.60 with a buy recommendation, backed by annual revenue of $63.89 billion and net income of $23.13 billion. On the more cautious side, GuruFocus calculates a GF Value of $321.66, implying that the stock is overvalued by 16.4%. The same service also flagged $283.7 million in insider sales over the past three months against a mere $0.4 million in purchases.
Should investors sell immediately? Or is it worth buying Broadcom?
Standard Chartered Modernizes with VMware Cloud Foundation
In enterprise software, Broadcom secured a major reference customer this month. Standard Chartered will deploy VMware Cloud Foundation as the backbone of a private cloud spanning 54 markets. According to the July 15 announcement, 70% of the bank’s global infrastructure already runs on the new architecture. Deployment times for new environments are expected to shrink from weeks to a single day, with a built-in zero-trust security framework. The partnership is designed to support core banking, payments and digital services. Financial terms were not disclosed, but the win is a tangible validation of Broadcom’s VMware strategy in the face of growing resistance from cloud providers and regulators.
Regulatory Pressure on VMware Intensifies
That resistance is becoming more organized. The Cloud Infrastructure Services Providers in Europe (CISPE) trade group, joined by four other organizations — Beltug, Cigref, VOICE and CIO Platform Nederland — sent a letter to EU Commissioners Ribera and Virkkunen on July 10, 2026, demanding interim measures against Broadcom. The groups accuse the company of significant price increases on VMware licenses and of shutting out cloud providers. They want the VMware Cloud Service Provider program kept in place for at least three more years while the European Commission conducts its formal investigation, which was opened after Broadcom acquired VMware in 2023. Broadcom has dismissed the claims, pointing out that CISPE is partly funded by large hyperscalers.
Across the Atlantic, U.S. regulators are also examining VMware licensing practices. Separately, the U.S. International Trade Commission has opened an investigation into alleged patent infringements involving memory chips from supplier Netlist, with Broadcom, Google and Nvidia all named. A further legal development came on July 16, when the European Court of Justice ruled that competition authorities can seize business emails during raids without a prior judicial warrant — a decision that strengthens the hand of EU antitrust enforcers in ongoing cases, including the Broadcom probe.
Broadcom at a turning point? This analysis reveals what investors need to know now.
Stock Deepens Pullback from 52-Week High
The combination of sector turbulence and regulatory uncertainty has weighed on Broadcom’s share price. Thursday’s close of $374.45 in New York represents a 23.75% retreat from the 52-week high of $429.60 reached in early June. In European trading, the stock ended at €327.55, down 3.45% on the day and 5.25% lower over the past week. The euro-denominated 52-week peak stands at €429.60. Despite the recent weakness, the shares are still up 12.14% year to date and 37.86% over the past twelve months.
The near-term trajectory will likely hinge on whether the momentum from AI chips and enterprise cloud wins can offset the growing regulatory overhang in Europe and the US — a question that probably will not be resolved until the EU probe advances in the months ahead.
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