The potential deal signals Qualcomm’s bid to strengthen its position in AI and data center semiconductors beyond its smartphone core.
- Tenstorrent, founded by chip veteran Jim Keller, builds AI-focused processors to run workloads more efficiently than traditional GPU-based systems.
- For Qualcomm, the move would extend its shift beyond mobile chips, following its $2.4 billion purchase of Alphawave Semi to strengthen high-speed data and compute capabilities.
- The potential deal highlights rising consolidation in AI hardware, with players like Nvidia and Meta Platforms also actively investing in chip startups.
Qualcomm (QCOM) is reportedly in talks to acquire Tenstorrent, an artificial intelligence chip startup. The two companies have discussed a valuation range between $8 billion and $10 billion, according to a report. The talks remain ongoing, and the final price could change or the deal could fall apart.
The QCOM stock ended Monday’s regular session up 4.29%, before slipping 0.7% in after-hours trading at the time of writing.
QCOM Expands AI Chip Push Beyond Smartphones
The potential acquisition would strengthen Qualcomm’s push into AI and data center chips as it works to diversify beyond its core business of smartphone and personal computer processors, reported The Information. The company has been actively exploring ways to compete more effectively in the AI chip market, where rivals continue to expand rapidly.
It is not yet clear whether any agreement would include performance-based milestone payments. Qualcomm could also consider a mix of cash and stock for the deal.
The San Diego-based chipmaker previously acquired Alphawave Semi for $2.4 billion to improve data transmission technology between chips.
Wells Fargo Raises QCOM Price Target
Beyond the deal talks, analysts are also focusing on Qualcomm’s near-term catalysts. A few days ago, Wells Fargo raised its price target on Qualcomm to $230 from $160, implying nearly 5% upside from its last close. It kept an ‘Equal Weight’ rating ahead of the company’s Investor Day on June 24, according to TheFly.
Wells Fargo said Amazon.com, Inc.’s (AMZN) cloud unit Amazon Web Services (AWS) is likely Qualcomm’s key hyperscale ASIC partner, adding that AWS already offers the AI100 Ultra. It said that pricing checks look relatively strong versus other GPU offerings and sees Investor Day as a potential positive catalyst. Still, it flagged a key risk: whether Qualcomm’s near-memory processing design can stand out in a fast-moving AI chip market.
Tenstorrent’s Position In AI Chips
Tenstorrent designs processors that it claims can run certain AI workloads more efficiently than traditional GPUs used by companies like Nvidia (NVDA). The startup was founded by Jim Keller, a chip architect who has worked on Apple processors and Tesla’s Autopilot hardware.
The company had previously explored raising funds at a valuation of around $3.2 billion, though it is unclear whether that round was completed. It has raised over $1 billion from investors including Samsung Securities, Fidelity, AFW Partners and Eclipse Ventures, reported The Information.
Competition In AI Hardware
If completed, the deal would add to a growing wave of acquisitions and investments in AI chip startups by major tech companies.
Nvidia has recently entered large licensing agreements tied to AI chip efficiency, while Meta Platforms (META) has also acquired chip startups to speed up its in-house silicon development.
Tenstorrent has also drawn early acquisition interest from Intel (INTL), according to a Bloomberg report in May.
QCOM Stock: What Retail Sentiment Says
On Stocktwits, retail sentiment for QCOM was ‘neutral,’ unchanged in the past one week, while message volume was ‘high.’
In the past 30 days, the watcher count for QCOM rose by 1.6%, while message volume surged 200% during the same period.
The QCOM stock has gained over 40% in the past 12 months.
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