Qualcomm's stock climbs as Amazon chip deal offers investors much-needed good news

By Britney Nguyen

Qualcomm shares have missed out on the chip sector's rally this year - but the company is now working on various chip projects with Amazon

Qualcomm announced a new collaboration with Amazon on Tuesday.

Qualcomm's stock popped higher Tuesday after the company announced a collaboration with Amazon.com for multiple generations of custom chips that will play into large-scale artificial-intelligence data centers.

Qualcomm (QCOM) also issued a stock warrant giving Amazon (AMZN) the option to purchase up to 25 million of its shares at $161.26 each, according to an 8-K filing. The warrant expires in September 2036 and is tied to potential revenue of up to $60 billion.

Qualcomm said the custom AI chips will be focused on inference, or the process by which AI models make predictions based on what they've learned. The company is also working with Amazon on optical-connectivity components, it said - including the next-generation 1.6T solution that can move data at 1.6 terabits per second.

"As AI demand accelerates, data-center infrastructure will require advances in both computing and connectivity to deliver greater performance with more efficiency," Qualcomm CEO Cristiano Amon said in a statement.

Qualcomm's stock gained 3.2% on Tuesday, while Amazon's stock was down fractionally. Shares of Qualcomm are now in positive territory for the year but have lagged meaningfully behind the PHLX Semiconductor Index SOX, which is up 69% over the course of 2026 to date.

"This deal may help provide more proof points for current targets (and it sounds like we may get more of them over time), though it appears to be more a clarification on the current trajectory vs. providing for upside, which may temper reaction for now," Bernstein analyst Stacy Rasgon wrote in a note to clients.

Qualcomm is in production with Amazon and expects to start seeing revenue from the deal in the December quarter, CFO Akash Palkhiwala said during an appearance at the Goldman Sachs Communacopia and Technology Conference on Tuesday.

Palkhiwala said the agreement is "one of the core components" that will allow the company to achieve its goal for $15 billion in data-center revenue by fiscal 2029. Qualcomm shared that target during its investor day in June.

He added that the company has "very high confidence" that it will see $5 billion in data-center revenue in fiscal 2027, which will start at the end of this month. Qualcomm also has data-center engagements with Meta Platforms (META) for central processing units, and with Saudi Arabia's Humain for AI accelerators.

"This is the day investors get to stop mourning Apple (AAPL)," Daniel Newman, CEO of tech research firm Futurum Group, said in emailed comments - referring to concerns over the loss of Qualcomm's modem business with the iPhone maker, which have weighed on its stock.

In Newman's view, Qualcomm's data-center business "just got a real customer" - and with ongoing constraints on computing power, he said he expects more hyperscaler cloud providers to follow suit.

Palkhiwala noted that Qualcomm has another hyperscaler engagement that it has not yet disclosed, but which will be "similar to the transaction" with Amazon.

-Britney Nguyen

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09-08-26 1732ET