Qualcomm shares advanced 3.2% Tuesday after the company outlined an agreement to develop successive generations of custom chips with Amazon for large-scale AI data centers. The partnership supports Qualcomm’s push to expand beyond smartphone chips and reach $15 billion in annual data-center revenue in fiscal 2029.
Speaking Tuesday at the Goldman Sachs Communacopia and Technology Conference, Chief Financial Officer Akash Palkhiwala described the Amazon agreement as central to Qualcomm’s fiscal 2029 data-center objective. The company first presented that target at its June investor day.
Palkhiwala also expressed strong confidence in generating $5 billion from data centers in fiscal 2027, which begins at the end of this month. Beyond Amazon, Qualcomm’s customers in this market include Meta Platforms, where it has central-processing-unit engagements, and Saudi Arabia’s Humain, where it is working on AI accelerators.
The commercial arrangement also gives Amazon the right to acquire as many as 25 million Qualcomm common shares for $161.26 apiece. Qualcomm disclosed the stock warrant in an 8-K filing, with an expiration date in September 2036.
Vesting will occur in stages as Amazon submits purchase orders and completes the associated purchases. The warrant is linked to potential revenue reaching $60 billion; the share-purchase right covers up to 25 million shares rather than an immediate acquisition of that amount.
Production with Amazon is already under way, Palkhiwala said. Qualcomm expects the agreement to begin contributing revenue in the December quarter.
The data-center effort forms part of a broader attempt to reduce Qualcomm’s reliance on smartphone-chip revenue. At the June event, the company introduced components and servers for that market and lifted its fiscal 2029 revenue projection for businesses outside handsets to $40 billion, nearly twice its previous forecast.
Qualcomm’s latest quarterly revenue totaled $9.9 billion. Its CDMA Technologies division, which encompasses handset and automotive sales, contributed $8.5 billion, while Qualcomm Technology Licensing generated $1.3 billion.
Under the Amazon agreement, the custom processors will handle inference: using trained AI models to produce predictions. The companies are also developing networking technology and other future data-center products.
“As AI demand accelerates, data-center infrastructure will require advances in both computing and connectivity to deliver greater performance with more efficiency,” Cristiano Amon, Qualcomm Chief Executive Officer, said in a statement.
Their work includes optical links, with a next-generation 1.6T offering designed to transfer 1.6 terabits of data per second. That development sits alongside the custom-chip program spanning multiple product generations.
