Broadcom’s new ten-year VMware agreement with NTT DOCOMO is encouraging evidence for the durability of its infrastructure-software business. Together with a continued agreement with FedEx, it shows two existing customers choosing to keep building around the company’s software. We see a reason to examine Broadcom beyond AI chips, while keeping contract economics, revenue recognition and valuation separate from the headline duration.
DOCOMO is extending a platform already central to its private cloud
On 19 October 2026, Broadcom announced a ten-year agreement covering VMware software licences, technical assistance and maintenance support. VMware Cloud Foundation has been central to DOCOMO’s private cloud since 2019. The agreement aims to improve security, speed the delivery of new services and support upgrades without service interruptions.
Private clouds remain part of the computing market alongside public providers such as Amazon Web Services, Microsoft Azure and Google Cloud. Organisations can use different models for different workloads. VMware Cloud Foundation brings the management of servers, storage and networking together within that infrastructure.
Our interpretation is that the decision to continue using a platform reflects a broader operating calculation than the licence price alone. Changing software requires testing, staff adaptation and continuity of service during the transition. A dependable product can become a lasting business relationship when its benefits justify the ongoing cost.
That relationship still has to be earned. Switching costs give a supplier an advantage, but poor service or unattractive pricing can eventually make the disruption of moving worthwhile.
FedEx provides a second example of an existing customer continuing
On 20 October 2026, Broadcom announced a continued infrastructure agreement with FedEx. The logistics company will retain software including VMware Cloud Foundation to support its private cloud and modernise applications.
The two announcements show established customers continuing to invest around Broadcom’s software. Neither release discloses the contract value. They therefore support an assessment of customer durability, rather than a calculation of incremental revenue or profit. Two examples also cannot establish retention across the entire customer base.
Software provides a substantial second source of revenue
In the third quarter of fiscal 2026, ended 2 August, Broadcom’s infrastructure-software segment generated $8.75 billion of revenue, up 29% year on year and about 30% of the company’s total. The segment includes more than VMware.
Broadcom attributes part of the increase to additional licence revenue recognised upfront on contracts without a right to cancel for convenience. Revenue recognition and cash collection are different events. We therefore assess reported growth alongside renewals and cash generation, rather than reading one quarter’s increase as a direct measure of recurring demand. The filing does not establish the specific accounting terms of the newly announced DOCOMO or FedEx agreements.
The combination creates two routes to business growth. AI chips and networking participate in new computing investment; infrastructure software supports systems customers already operate. The distinction broadens the business, but does not remove its exposure to technology budgets.
Shareholder value depends on economics and expectations
For us, the useful investment question is whether long customer relationships turn into profitable renewals and cash generation. Product development and service costs must be controlled without undermining the quality that encourages customers to stay.
A favourable business development also needs to be considered against the share price. If the valuation assumes faster growth or better margins than the company delivers, investment returns can disappoint even while the business progresses. The announcements alone do not establish whether Broadcom’s shares are attractively priced.
DOCOMO’s ten-year commitment gives substance to the software side of Broadcom’s investment case. We will judge its long-term significance through the company’s continuing ability to earn its place in customers’ operations and translate that position into per-share value.
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Sources
Q3 filing: https://www.sec.gov/Archives/edgar/data/1730168/000173016826000080/avgo-20260802.htm
Cloud models: https://cloud.google.com/learn/what-is-cloud-computing
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