Qualcomm jumps on the AI bandwagon

Amazon just received a warrant—and no, it’s not the kind that has anything to do with Big Tech’s legal troubles.

Qualcomm issued Amazon warrants to acquire $4 billion worth of the tech giant’s stock as part of a new chip deal that could ultimately be worth up to $60 billion.

Qualcomm will build out Amazon Web Services’ AI infrastructure “across multiple generations of customized silicone” according to a press release from the companies. Shares of Qualcomm rose 3.16% today as investors cheered the company’s evolution from a smartphone-chip maker into a bigger player in the AI infrastructure race.

If you can’t beat ’em…

For years, Nvidia has been the reigning king of AI hardware. But as Big Tech’s demand for all-things AI has become insatiable, other chipmakers are following the money and transforming into AI infrastructure powerhouses.

Part of the dynamic comes down to technology. Nvidia’s main product is graphics processing units, aka GPUs, which run AI models. But as more and more tech companies develop large language models, the market for central processing units (CPUs) has grown, too. While GPUs are still the main chip used for running models, CPUs can perform sequential tasks in the background.

That’s why, back in June, Qualcomm first entered the AI chip race when it announced its own CPU for data centers dubbed Dragonfly C1000, which Meta will start using in 2028. But Qualcomm still has steep hurdles to overcome before it transforms into the next Nvidia.

“Data center progress is promising,” wrote Bank of America analyst Vivek Arya after the company’s last earnings report. He expects the company to rake in $600 million in data center revenue in the first quarter of 2027, and $5 billion by the end of 2027.

But in the same July note, Arya downgraded the stock’s price target from $220 to $180, and gave it an “underperform” rating, arguing that Qualcomm’s data center expansion brings with it lower margins and higher costs.

While there’s plenty of money flowing into the AI trade, Qualcomm still has to prove it can turn that demand into actual profits.—LB