Qualcomm's shares climbed 4% on Tuesday following the announcement of a data center infrastructure collaboration with Amazon Web Services (AWS), marking a significant boost for the chipmaker's ambitions to challenge Nvidia in the artificial intelligence market.
As part of the agreement, Qualcomm issued warrants to Amazon.com, granting the e-commerce giant the right to purchase 25 million shares of Qualcomm stock at $161.26 per share, totaling a $4 billion investment. According to the press release, Qualcomm is working with Amazon on "multi-generational custom silicon" to support AWS's AI infrastructure buildout, with a primary focus on AI inference workloads.
The announcement stated: "As AI workloads grow exponentially, the demand for compute, storage, networking, memory bandwidth, and energy-efficient infrastructure has reached unprecedented levels. This collaboration combines Amazon's comprehensive, secure, and cost-effective AI infrastructure with Qualcomm's expertise in low-power processing, chip design, and system-level integration."
Qualcomm, widely recognized for its processors in smartphones and other mobile devices, made a major push into the data center arena this June with the launch of its data center CPU, the Dragonfly C1000. The company revealed that Meta plans to adopt this chip once mass production begins in 2028. This new processor is specifically engineered for agentic AI, emphasizing both computational performance and power efficiency.
At that time, Qualcomm set a target of $15 billion in data center revenue by fiscal 2029 and unveiled a product roadmap that includes AI chips, multi-chip interconnect products, and other offerings to compete in this market. With the AWS deal, Qualcomm has secured backing from another hyperscale cloud provider, joining Meta in a group of tech giants that each spend hundreds of billions annually on AI infrastructure capital expenditures.
Nvidia has risen to become the world's most valuable company through its dominance in the graphics processing unit (GPU) market, where GPUs serve as critical hardware for building complex AI models and handling massive computational workloads. However, as CPUs have proven increasingly vital to AI, more chipmakers are entering the AI arena. GPUs contain tens of thousands of miniature cores designed for simultaneous high-volume calculations, making them ideal for training and running AI models, while CPUs rely on fewer, more powerful cores to handle sequential general-purpose tasks.
Bank of America projects that the CPU market could more than double in size, expanding from $27 billion in 2025 to $60 billion by 2030. Both Intel and Advanced Micro Devices have seen substantial growth in data center CPU demand, while Nvidia also disclosed additional details in March about a CPU optimized for agentic AI workloads. Dion Harris, head of Nvidia's AI infrastructure division, noted in an interview at the time: "As we expand AI and agentic workflows, the CPU is increasingly becoming the performance bottleneck."
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