Example methods are provided for a host to perform large receive offload (LRO) processing in a virtualized computing environment. The method may comprise receiving, via a physical network interface controller (NIC), incoming packets that are destined for the virtualized computing instance, and processing the incoming packets to generate at least one processed packet using a networking service pipeline that includes a packet aggregation service and multiple networking services. The packet aggregation service may be configured to aggregate the incoming packets into an aggregated packet and enabled at a service point along the networking service pipeline based on an LRO capability of at least one of the multiple networking services to process the aggregated packet. The method may also comprise forwarding the at least one processed packet generated by the networking service pipeline to the virtualized computing instance.