According to an analyst, Nutanix (NTNX) is predicted to attract customers away from competitor VMware, now owned by Broadcom (AVGO), due to its superior cloud-computing network management software. Raymond James analyst Simon Leopold upgraded Nutanix stock on Wednesday, citing Broadcom’s efforts to enhance growth and performance for VMware as a reason for the change. Broadcom has been acquiring companies to strengthen its software and services business, but Leopold warned that it may take years for some customers to transition from VMware to Nutanix due to complex networking technologies involved.

On the stock market today, Nutanix stock rose 2.8% to 67.15 in morning trading. Nutanix sells cloud-computing network management software and has recently formed a marketing partnership with Cisco Systems (CSCO). Despite VMware’s potential sales advantages as part of Broadcom, Nutanix stock has increased by 38% in 2024 and is up 169% from a year ago. According to IBD Stock Checkup, Nutanix’s relative strength line has hit new highs, earning it “blue dot” status and positioning it as a potential takeover target.

Broadcom’s acquisition of VMware last year in a $69 billion deal was controversial due to concerns about antitrust regulations. However, the deal closed in November and Broadcom has continued to acquire companies since then. Some industry experts believe that Broadcom’s focus on software and services could lead it towards becoming more of a technology company than just a chipmaker.