Qualcomm shares rise on Amazon AI partnership
Qualcomm Technologies (NASDAQ: QCOM) shares were up roughly 3% on Tuesday afternoon, stabilising after an earlier intraday surge of about 9.5%. The price move followed the announcement of a landmark multi‑generational collaboration with Amazon. Under the agreement, Qualcomm will issue a warrant allowing Amazon to purchase up to 25 million shares of Qualcomm common stock, cementing a long‑term partnership between the two technology giants.
CFO commentary and revenue outlook
Speaking at a Goldman Sachs conference in San Francisco, Qualcomm Chief Financial Officer Akash Palkhiwala said the financial impact of the Amazon deal will be immediate, with revenue expected to begin in the December quarter and production already underway. He expressed "very high confidence" that Qualcomm will achieve its $5 billion data‑center revenue target for fiscal 2027. Palkhiwala added that the fiscal year starts in about a month, that purchase orders are in hand and that the company is already building the required chips.
Expansion beyond Amazon
While highlighting the Amazon pact as a massive win, Palkhiwala noted it is only the first of several hyperscaler engagements. He referenced a "very large deal" with another unnamed hyperscaler that is similar in technology scope to the Amazon collaboration, though details were not disclosed.
CPU market opportunity
Palkhiwala pointed out that the total addressable market (TAM) for CPUs has tripled since Qualcomm’s initial agreement with Meta, now exceeding $200 billion annually. He estimated that roughly half of this market could transition to Qualcomm’s architecture, which the company believes will deliver superior performance‑per‑watt and performance‑per‑area.
Edge AI transition
The CFO described a parallel shift at the edge, where AI accelerators will be co‑located with main processors to handle pervasive, low‑power AI tasks. Qualcomm is developing a compute‑plus‑memory stack intended as a coprocessor for phones, cars, PCs and robotics.
Smartphone market context
Palkhiwala acknowledged that Qualcomm’s legacy smartphone business is at the "low point of the cycle," with the low‑end segment still under pressure.
Technical details of the Amazon agreement
The core agreement covers chips designed for AI inference workloads as well as high‑performance optical connectivity solutions capable of up to 1.6 Tbps. The collaboration combines Amazon Web Services’ extensive infrastructure with Qualcomm’s power‑efficient processing, advanced SerDes and optical DSP technologies. Additionally, Qualcomm will expand its use of AWS AI tools, including Amazon Bedrock, for electronic design automation, aiming to significantly shorten chip design cycles.
Market reaction
The combined news of the Amazon partnership, the warrant issuance, and the CFO’s confident revenue outlook lifted Qualcomm’s share price by about 3% in the trading session.