Qualcomm with $15B Datacenter Revenue Target by 2029: How QCOM Challenges Nvidia After Amazon Deal

Qualcomm is shifting its business model: The California chip company, known primarily for smartphone processors, aims to achieve annual revenue of $15 billion in the datacenter segment by fiscal year 2029. The company presented this goal for the first time at its investor day in June 2026. As an interim step, Qualcomm is targeting datacenter revenue of $5 billion for fiscal year 2027, which begins at the end of September 2026.

The datacenter business is part of a broader diversification strategy. Qualcomm expects to generate $40 billion in revenue outside the smartphone business in fiscal year 2029 – nearly doubling the forecast communicated in June 2026. For comparison: in the most recent quarter, Qualcomm achieved total revenue of $9.9 billion, of which $8.5 billion came from the CDMA Technologies segment (smartphones and automotive) and $1.3 billion from licensing businesses.

Amazon Deal: $60 Billion Volume Over Ten Years

On September 8, 2026, Qualcomm announced a multi-year partnership with Amazon Web Services. The deal involves developing customized AI chips for large-scale datacenters and includes multiple chip generations as well as optical connectivity products.

The commercial structure is unusual: Amazon received warrants to purchase up to 25 million Qualcomm common shares at an exercise price of $161.26 per share. If fully exercised, this would correspond to a potential value of approximately $4.03 billion. The warrants run until September 3, 2036, and vest in tranches tied to commercial agreements and product purchases. Approximately 15 percent of the warrants vest immediately in connection with Amazon's initial commitments. Full allocation depends on Amazon purchasing $60 billion worth of Qualcomm datacenter products over ten years.

The partnership focuses on AI inference – using trained models to generate predictions. Development also includes optical connections, including a next-generation 1.6-terabit solution that can transmit data at 1.6 terabits per second. According to Qualcomm, production was already underway in September 2026, with first revenue expected in the December 2026 quarter.

CFO Akash Palkhiwala called the Amazon deal "central" to the 2029 datacenter target and a "landmark deal." He expressed "very high confidence" in the $5 billion target for fiscal year 2027.

Additional Datacenter Customers: Meta, Humain, and an Unnamed Hyperscaler

Amazon is not Qualcomm's only partner in the datacenter business. In June 2026, the company announced that Meta Platforms is a launch customer for the Dragonfly-C1000 server CPU, with production planned for 2028. Meta is also collaborating with Qualcomm on additional CPU projects.

Additionally, Qualcomm cooperates with Saudi Arabia's Humain on AI accelerators. On September 9, 2026, the company also mentioned another engagement with an unnamed hyperscaler that is in development. In the long term, Qualcomm aims to capture 5 percent of the entire datacenter market.

Software Strategy: Modular Acquisition Against Nvidia's CUDA

To compete with Nvidia's established CUDA software platform, Qualcomm acquired the software company Modular. CFO Palkhiwala explained on September 9, 2026, that the acquisition filled a "missing piece" in Qualcomm's AI offering.

Modular's software enables developers to implement AI models across different chip platforms from Nvidia, AMD, and Qualcomm without compromising performance. The platform supports major cloud providers like AWS and Apple. The key advantage: developers only need to port models once to use them across different silicon platforms.

Qualcomm plans an "Android-like approach," in which the lower layers of the software stack are made available industry-wide. The platform is intended to support both edge and datacenter chips. Palkhiwala described the acquisition as "timely" as Qualcomm scales up its datacenter products.

Market Reaction and Valuation

The Qualcomm stock reacted positively to the Amazon announcement: on September 8, 2026, the price rose 3.2 percent. The following day, the stock gained another 2 percent in pre-market trading. One source reported gains of 9 percent total in connection with the announcement.

CFO Palkhiwala called the stock "well priced" on September 9 and described the company as "highly diversified and growing." CEO Cristiano Amon commented on September 8: "As AI demand accelerates, datacenter infrastructure will need advances in both compute and connectivity to deliver higher performance with greater efficiency."

Strategic Context: Attack on Nvidia

Qualcomm's datacenter offensive is directly targeting Nvidia's market dominance in the AI chip segment. Nvidia has so far benefited not only from superior hardware, but also from CUDA, a comprehensive software ecosystem that locks developers into the platform. With the Modular acquisition, Qualcomm is attempting to break this dependency by offering a cross-platform solution.

The Amazon partnership gives Qualcomm a long-term revenue base and planning certainty for developing additional chip generations. Unlike standardized products, Qualcomm is developing customized solutions for Amazon's specific requirements – an approach also being pursued with Meta.

Whether Qualcomm achieves the $15 billion target by 2029 depends on whether additional hyperscalers place large orders and whether the software strategy actually frees developers from Nvidia. The Amazon deal alone – even at full exploitation of the $60 billion volume over ten years – is mathematically insufficient to reach the ambitious annual targets. Qualcomm needs additional customers and product generations to develop the datacenter business into a major revenue pillar.