On Monday, Netflix Inc. NFLX prosecuted Broadcom Inc. ‘s AVGO cloud computing subsidiary VMware in a California court for allegedly infringing its patent rights.
Netflix accused VMware of violating five patent rights in “virtual machines” that run another computer’s operating software on a host computer, according to the Reuters report.
Broadcom’s U.S. lawsuit against Netflix will likely go to trial in June 2025.
Netflix sought monetary damages. Broadcom held $9.35 billion in cash and equivalents as of November 3, 2024.
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This is not the first case between the two companies – Broadcom filed a patent dispute case against Netflix in 2018 for alleged infringement of Broadcom patents related to video streaming technology. In 2023, Broadcom snapped VMware for $69 billion.
Analyst opinions on Broadcom and Netflix: In September 2024, JPMorgan analyst Harlan Sur lauded the VMware acquisition for impressive synergies, with a 25%+ sequential growth expectation in the fourth quarter. VMware helped infrastructure software revenue grow 41% in the third quarter, helping Broadcom’s revenue climb to $13.07 billion, topping consensus estimates.
Sur flagged VMware’s strong software renewal rates and upsell opportunities, with revenue potentially reaching $4.5-$5 billion per quarter by 2025.
Rosenblatt, B of A Securities, and JP Morgan raised their price targets on Broadcom after its fourth-quarter report, citing its custom-chip (ASIC) AI and ability to maintain a relationship with Apple Inc AAPL.
Oppenheimer analyst Jason Helfstein hailed Netflix as the sole investable mainstream media stock, citing its streaming moat and potential for live event upside.
Price Actions: NFLX stock closed up 2.27% at $932.12 on Tuesday. AVGO up by 3.15%.
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