NEW YORK, July 17, 2026 – Broadcom Inc. (NASDAQ: AVGO) shares staged a recovery Friday afternoon, climbing 0.5% to $376.38 by 1:03 p.m. EDT, after tumbling as much as 4.4% earlier in the session to $358.05. The rebound comes amid ongoing chip sector weakness and follows the announcement of a significant private-cloud partnership with Standard Chartered (LON: STAN).
VMware Integration Drives Profit Mix Shift
The chipmaker’s infrastructure software division, bolstered by the VMware acquisition, reported a segment operating margin of 78.7% in the fiscal second quarter, significantly outpacing the semiconductor segment’s 61.8% margin. Software contributed 32% of total revenue but generated 38% of segment operating income, underscoring its growing importance to profitability.
Standard Chartered disclosed that 70% of its global infrastructure now runs on VMware Cloud Foundation, spanning operations across 54 markets. The bank noted that deployment time has been slashed from weeks to a single day, though no contract value or revenue timeline was provided.
AI Chip Revenue Surges, But Margins Lag
Broadcom’s AI-related semiconductor sales reached $10.8 billion in the second quarter, a 143% year-over-year surge, representing 49% of total revenue. The company forecasts fiscal third-quarter AI chip sales of $16 billion, or about 54% of projected total revenue of $29.4 billion. However, the shift toward lower-margin semiconductor goods continues to weigh on overall profitability.
Total second-quarter revenue rose 48% to $22.19 billion, with semiconductor solutions contributing $15.009 billion (up 79%) and infrastructure software adding $7.178 billion (up 9%). The company guided for third-quarter non-GAAP operating margins of 67%.
Market Context and Peer Performance
The broader semiconductor sector remained under pressure, with the PHLX semiconductor index falling 1% and still more than 20% below its late-June record close. Among peers, Nvidia (NASDAQ: NVDA) slipped 0.8%, Advanced Micro Devices (NASDAQ: AMD) traded near flat, and Marvell Technology (NASDAQ: MRVL) rose 2.3%.
“The pullback in chip stocks is a healthy correction after a strong run,” said Louis Kondratev, a trader at XFUNDs, commenting on the sector’s recent volatility.
Risks and Outlook
Despite the software margin boost, risks remain. The financial details of the Standard Chartered deal were not disclosed, and much of the deployment is already complete. A further downturn in the semiconductor cycle could offset the benefits from the software division. Broadcom’s stock has experienced heavy fluctuations recently as investors weigh the mixed signals from its two core businesses.
