Qualcomm (NASDAQ: QCOM), the chipmaker best known for smartphone processors, jumped in trading on Tuesday after it signed a multi-generation deal with Amazon’s AWS cloud unit to build custom AI chips and data-centre connectivity.
QCOM was up 4.5% at $176.33 during Tuesday’s session, from Monday’s close of $168.74, having traded as high as $183.49 and as low as $173.15 intraday.
Qualcomm and AWS, Amazon’s cloud computing division, announced a multi-generation collaboration to build customised silicon for large-scale AI inference and to co-develop optical connectivity for AWS data centres, extending up to 1.6 terabits per second. Bloomberg reported that as part of the deal, Qualcomm issued AWS a warrant to buy up to 25 million QCOM shares, worth as much as $4bn, at an exercise price of $161.26, vesting in tranches tied to as much as $60bn of cumulative chip orders from Amazon. Qualcomm chief executive Cristiano Amon said the company was “pleased to work with AWS on customized silicon and connectivity solutions, bringing decades of leadership in advanced processing and power-efficient compute, to deliver breakthrough performance and enable the next generation of AI infrastructure.”
The deal matters because Qualcomm is pushing to diversify away from handsets, where Apple’s share of the upcoming iPhone launch is now expected to come in well below the roughly 20% previously estimated, with Apple-related product revenue expected down around 50% quarter-on-quarter and QCT Android handset revenue down 20% year-over-year. Non-handset revenue growth is accelerating, from 24% in fiscal 2026 to more than 60% in fiscal 2027, and management is targeting $40bn in non-handset revenue by fiscal 2029, with data-centre revenue guided to rise from $5bn in fiscal 2027 to $15bn by fiscal 2029. The warrant structure ties Amazon’s equity upside to Qualcomm actually delivering large chip orders, rather than handing over free shares, aligning the two companies’ incentives around execution.
Broadcom shares also rose alongside Qualcomm’s move, which market commentary read as validation of the wider custom AI silicon category rather than business shifting away from incumbent hyperscaler chip suppliers. Amazon’s own shares were little changed on the news.
Qualcomm’s own release did not disclose committed order volumes, dollar revenue or a delivery timetable for the AWS partnership, leaving the scale of the arrangement dependent on future orders rather than confirmed today.