Qualcomm Secures Major AI Chip Deal With Amazon

Qualcomm shares surged Tuesday morning following the announcement of a multi-generation supply deal with Amazon's AWS. The agreement centers on the co-development of customized silicon, specifically engineered for large-scale AI inference workloads and high-performance optical connectivity. This strategic partnership is poised to significantly advance Qualcomm's ambitions in the data center sector.

Qualcomm's CEO, Cristiano Amon, has outlined an aggressive growth strategy, targeting $40 billion in non-handset revenue by fiscal year 2029. Data center revenue is projected to be a key driver, with forecasts of $5 billion in fiscal 2027, climbing to $15 billion by fiscal 2029. This Amazon collaboration aligns with and expands upon previous previews of hyperscaler custom silicon engagements.

The deal also involves Qualcomm deepening its use of AWS for electronic design automation, aiming to accelerate chip design cycles. This move validates Qualcomm's push into the data center and also provides broader industry validation for the custom silicon category, even boosting competitors like Broadcom.

Amazon, meanwhile, continues to diversify its silicon suppliers to optimize inference costs and maintain customer choice. The AWS chip roster now includes Qualcomm, alongside its own Trainium and Graviton processors, enhancing its options without disrupting existing silicon programs.