Qualcomm Stock Spikes as It Bags Massive Data Center Deal With Amazon

Aditya Raghunath

Thu, September 10, 2026 at 8:08 PM GMT+3 5 min read

A photo of a corporate Qualcomm sign by JHVEPhoto via Adobe Stock

Earlier this week, Qualcomm (QCOM) landed one of the biggest deals in its history, and Wall Street noticed right away. The company announced a multi-generation partnership with Amazon (AMZN) on Sept. 8, according to a company statement. The deal covers custom chips for AI data centers and new optical connectivity technology.

Qualcomm's stock climbed on the news as investors welcomed proof that the company's push into data centers is finally paying off. Valued at a market cap of $188 billion, the smartphone chipmaker has returned 280% to shareholders in dividend-adjusted gains. However, it also still trades 30% below all-time highs.

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Why Qualcomm Needed This Data Center Win

Qualcomm has spent years trying to reduce its reliance on phones. It built out businesses in automotive chips and internet-connected devices. But data centers were the missing piece, and investors wanted proof the company could compete in this rapidly expanding AI segment.

Qualcomm Chief Financial Officer and Chief Operating Officer Akash Palkhiwala addressed this directly at the Goldman Sachs Communacopia and Technology Conference on Sept. 8. He called the Amazon partnership "a landmark deal for us in the data center business" that "kicks us off there."

Just months ago at its Investor Day, Qualcomm set a target of $5 billion in data center revenue for fiscal 2027 and $15 billion by fiscal 2029.

Palkhiwala said the Amazon agreement makes that fiscal 2027 number "very high confidence" because the company already has purchase orders and is building chips today. Revenue from the partnership starts flowing in the December quarter.

According to the company statement, the collaboration has two main parts.

First, Qualcomm will build customized silicon for Amazon Web Services across multiple product generations.
Second, the two companies will work together on optical connectivity solutions, starting at 1.6 terabits per second and moving to future generations.

Qualcomm will also lean more on AWS tools, including Amazon Bedrock, to speed up its own chip design work. Qualcomm will issue warrants tied to as much as $60 billion in Amazon purchases of data center products over the next 10 years. About 15% of those warrants vest upfront, tied to commitments Amazon is making right now.

Qualcomm Chairman and CEO Cristiano Amon said the deal reflects the company's "decades of leadership in advanced processing and power-efficient compute." AWS Vice President Prasad Kalyanaraman said it builds on "a strong foundation of partnership" between the two companies.

Palkhiwala also confirmed Qualcomm is working with a second, unnamed hyperscaler on a similar arrangement.

The Technology Behind Qualcomm's Data Center Push

Qualcomm's data center strategy rests on four pillars, Palkhiwala explained: custom silicon, AI accelerators, CPUs, and connectivity.

The most unusual piece is a technology called High-Bandwidth Compute, or HBC. Durga Malladi, who leads technology planning for Qualcomm's edge and data center businesses, described the idea in detail at the Deutsche Bank 2026 Technology Conference on Aug. 26.

The problem HBC solves is simple to explain, even if the engineering is not. Computing power in AI chips has grown massively over the past several years, and memory speed has not kept pace. This gap creates what engineers call a "memory wall," and it is a major bottleneck during a stage of AI processing called decode, which is memory-heavy rather than compute-heavy.

Qualcomm's answer is to place memory and compute physically closer together, rather than relying on the industry standard approach called high-bandwidth memory. Malladi said HBC delivers up to six times better performance per watt than that standard. The first generation of HBC ships commercially in 2027, with a second generation following in 2028.

Data centers are the new growth driver, but Qualcomm's other businesses are also reporting steady numbers. Palkhiwala said Qualcomm expects to become the largest chip supplier to the automotive industry next year. Compute power in its automotive chips has grown eight times over just two product generations, driven largely by demand for AI features inside vehicles.

On smartphones, Qualcomm's largest and most mature business, Palkhiwala said the premium end of the market has held up well despite rising memory costs squeezing cheaper phones.

He described the smartphone business as being at a low point in its cycle, with several factors, including new AI-first devices, positioned to drive growth from here.

What It Means for QCOM Stock Going Forward

The Amazon partnership gives Qualcomm a long-term customer relationship with one of the world's largest cloud providers. Palkhiwala also pointed to the unnamed second hyperscaler engagement as further evidence that Qualcomm's data center ambitions extend well beyond a single customer.

Combined with growth in automotive and an expected rebound in smartphones, Qualcomm now has three separate businesses that could each drive earnings higher over the next few years.

Analysts tracking QCOM stock forecast earnings to expand from $10.52 per share in fiscal 2025 (ended in September) to $20.84 per share in fiscal 2030. If the AI stock trades at 15x forward earnings, in line with its 10-year average, it could surge nearly 80% over the next three years.

Out of the 33 analysts covering QCOM stock, nine recommend "Strong Buy," two recommend "Moderate Buy," 19 recommend "Hold," one recommends "Moderate Sell," and two recommend "Strong Sell." The average QCOM price target is $198.31, above the current price of $181.