Player three has entered the game

Forget GPUs—the hot new tech on the block are AI accelerators, which sound like something out of a sci-fi movie but are actually specialized hardware that speeds up AI processing.

That has made AI accelerators the new must-have for big tech companies pouring billions into the technology, and Nvidia and AMD are the only names in the game…until today.

Qualcomm unveiled two new AI accelerator chips built to compete with the big boys: the AI200, which will be available next year, and the AI250, hitting the market in 2027. Shares of Qualcomm jumped 11.09% on the news.

Can Qualcomm really compete?

Qualcomm makes processors for smartphones, but it has big AI aspirations. The company says its leadership in neural processing units, or NPUs, which speed up AI processing, should allow it to go toe-to-toe with incumbents. NPUs are purportedly more power-efficient and cost-effective than GPUs when it comes to AI tasks, which will appeal to the many hyperscalers investing big bucks in industry.

Speaking of which, the reason Qualcomm is leaping off your phone and into the AI business is obvious: money. Tech companies are expected to spend up to $6.7 trillion on data centers through 2030, according to CNBC, and Qualcomm hopes that its chips, which focus less on AI training and more on running AI models themselves, will appeal to players like Alphabet and Microsoft as they build their chatbots.

A minnow among sharks

Qualcomm may have kicked down the door to the AI accelerator industry today, but it still has to contend with two heavy hitters: AMD and Nvidia.

Nvidia accounts for about 90% of the chip market at the moment, according to CNBC, and that dominance isn’t dissipating anytime soon. AMD is no slouch, either, and just inked a $1 billion deal with the Department of Energy to build two supercomputers. Shareholders of both companies don’t seem worried about the new guy: Nvidia rose 2.81%, and AMD added 2.7%.

But there is an opportunity for even a smaller player like Qualcomm to compete. Companies like OpenAI are investing heavily in AI data centers, but have very few options for where to get their chips. OpenAI’s quest for more computing power recently led it to turn from Nvidia, its core supplier, to AMD, inking a mega-deal with the latter earlier this month. Qualcomm now presents another alternative.

Bloomberg anticipates the AI accelerator market could be worth upward of $500 billion, and there’s a good chance that Qualcomm gets at least a small piece of the pie. But with so much money floating around this industry right now, even a sliver could be enough to send Qualcomm into the pantheon of top AI trades.—MR