Broadcom Stock Rises Pre-Market Despite Netflix Patent Lawsuit Against VMware: Retail Reaction Subdued

Shares of Broadcom Inc. rose over 2% in premarket trading on Tuesday, even as Netflix filed a lawsuit against Broadcom’s subsidiary, VMware, alleging patent infringement.

Netflix claims that VMware improperly utilized its patented technology for “virtual machines,” which allows one computer operating system to function within another. 

The streaming giant’s stock was flat pre-market.

The lawsuit specifically targets VMware’s vSphere virtualization platform, which Netflix alleges infringes on its patents related to virtual-machine communications. 

According to the legal documentation, the streaming giant is seeking unspecified monetary damages. 

Broadcom has not issued a comment on the lawsuit, nor has Netflix. 

The two companies have been engaged in a separate patent dispute since 2018, centered on allegations that Netflix infringed Broadcom’s patents tied to video streaming technology. 

That legal battle spans multiple jurisdictions, including the U.S., Germany, and the Netherlands, with Broadcom's U.S. lawsuit against Netflix slated for trial next June.

Retail sentiment on Stocktwits remains ‘neutral’ for Broadcom, although discussions around the stock increased from ‘low’ to ‘normal’ levels following Monday’s rally. 

Broadcom, which acquired VMware for $69 billion in 2022, saw its stock end Monday’s session with a 5.5% gain, the best performance in the S&P 500. The semiconductor and software company’s shares have climbed 108% year-to-date.

Retail investors on the platform are optimistic that the stock’s momentum—dubbed a ‘Santa Claus’ rally—could extend into the new year.

Morgan Stanley recently named Broadcom one of its top investment ideas for 2025. Analyst Joseph Moore highlighted the company’s growth prospects beyond next year as a key factor.

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