Critics of Broadcom Inc (NASDAQ:AVGO) remain skeptical of the U.S. chipmaker’s recent efforts to address concerns regarding its cloud licensing practices. Despite Broadcom’s revisions, which were aimed at appeasing EU business users and a trade group, critics argue that the changes fall short of resolving the underlying issues.
Broadcom CEO Hock Tan announced last week a series of modifications to the licensing conditions of VMware, a cloud computing company recently acquired by Broadcom. These adjustments included significant price reductions for VMware’s cloud platform and changes allowing customers more flexibility in transferring workloads between data centers and cloud providers. However, critics, including trade body CISPE, along with other EU trade groups and cloud service providers, have expressed dissatisfaction with Broadcom’s response.
In a joint statement, these groups criticized Broadcom for what they perceive as unjustifiable price hikes, changes to billing practices, and restrictions on software licensing terms. They argue that these actions limit customer choice and unfairly lock in customers and partners to Broadcom’s services. Despite Broadcom’s assertion that it aimed to offer more choices for customers and partners, the trade groups have called on EU antitrust regulators to investigate the matter further.
Meanwhile, Oppenheimer analyst Rick Schafer remains optimistic about Broadcom’s prospects. He cites the company’s expanding earnings power, stable industrial exposure, and defensible technology as key factors driving its success. Schafer predicts that Broadcom will benefit from its leading position in high-speed networking, connectivity, and custom computing, particularly as demand for data center artificial intelligence continues to rise. Additionally, Ericsson’s recent observations of improved carrier spending suggest positive outcomes for Broadcom, especially given the expected increase in handset demand.
Despite the criticism and regulatory scrutiny, Broadcom’s stock has performed strongly over the past year, gaining 93%. Investors seeking exposure to Broadcom may consider ETFs such as Pacer Funds Pacer Data And Digital Revolution ETF (NYSE:TRFK) and Amplify ETF Trust Amplify Cybersecurity ETF (NYSE:HACK).
As of the last check on Tuesday, AVGO shares were trading lower by 0.70% at $1,233.01 premarket.
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