QCOM Stock Extends Gains Overnight: Analyst Says Amazon AI Deal 'Changes Calculus For Qualcomm'

Amazon’s custom AI silicon push gives Qualcomm a fresh growth avenue beyond smartphones, with analysts reassessing the chipmaker’s prospects.

• AWS will use Qualcomm’s custom chips for AI inference and data-center networking, with revenue contribution expected to begin in the December quarter.
• Analysts see the pact as a major step in Qualcomm’s diversification into data centers.
• CFO Akash Palkhiwala referred to the deal as “the first of many” in a media interview.

Qualcomm, Inc.’s massive AI chip deal with Amazon.com, Inc. marks the chipmaker’s entry into the lucrative data center market and substantially reshapes its financial outlook, analysts said. 

“We have long said Qualcomm can be a massive beneficiary of its data center expansion and this deal alone completely changed the calculus for Qualcomm,” Futurum Group CEO Daniel Newman said in an X post.

QCOM stock gained 3.2% on Tuesday and another 1% in overnight trading.

Qualcomm, best known for wireless chips and Snapdragon processors, announced Tuesday that Amazon Web Services will use its custom silicon for AI inference and data-center networking. The companies will also develop optical cable and other equipment for multiple generations. 

The pact also gives Amazon the right to acquire up to $4 billion in Qualcomm stock.

Qualcomm: Amazon Deal Revenue To Start Pouring In Q1 

Qualcomm will start booking revenue from Amazon in the December quarter, CFO Akash Palkhiwala told Bloomberg. Palkhiwala referred to the deal as “the first of many.”

The partnership comes weeks after Marvell Technology struck a similar custom AI chip deal with Google, giving the tech giant the right to buy a stake worth up to $12.2 billion.

QCOM Gains Data Centers Exposure 

For Qualcomm, it’s a sign that its efforts to diversify beyond smartphones are gaining traction as it faces the eventual loss of its Apple ​modem business, rising component costs and weaker handset demand.

Qualcomm has spent the past year courting cloud providers with custom AI ​chips and data-center technology as they seek alternatives to Nvidia's dominant processors.

Qualcomm’s revenue fell 4% to $9.95 billion in the most recent quarter, which ended in June, reflecting a 20% drop in handset revenue that more than offset growth in automotive and IoT. 

Its largest business, QCT (Qualcomm CDMA Technologies), contributed $8.50 billion, or about 85.5% of total revenue, while QTL licensing contributed 12.9%; the remaining roughly 1.7% came largely from the nonreportable Data Center business and other items.

Retail View On QCOM

QCOM was among the top three trending tickers on Stocktwits at the time of writing, with retail sentiment for the stock flipping to ‘bullish’ from ‘bearish.’

“$QCOM all this hype and news to not even hold 5%? While others are running 10% with no news,” a trader said, while another called Qualcomm “The Dark Horse.”

QCOM stock has gained around 2% this year and risen over 10% in the last 12 months.

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