Qualcomm, Inc. (NASDAQ: QCOM) stock extended its gains overnight after a landmark artificial intelligence chip deal with Amazon Web Services signaled a major shift in the chipmaker’s strategic direction.
QCOM shares climbed 3.2% on Tuesday before adding another 1% in overnight trading, as analysts moved quickly to reassess the company’s long-term financial prospects.
Amazon Web Services will use Qualcomm’s custom silicon for AI inference and data-center networking, with the two companies also agreeing to develop optical cable and other equipment across multiple generations.
The partnership additionally grants Amazon the right to acquire up to $4 billion in Qualcomm stock, underlining the depth of the strategic commitment between the two firms.
Qualcomm CFO Akash Palkhiwala told Bloomberg that revenue from the Amazon deal will begin flowing in the December quarter, describing the agreement as “the first of many.”
Futurum Group CEO Daniel Newman offered a pointed assessment of the deal’s significance, writing on X: “We have long said Qualcomm can be a massive beneficiary of its data center expansion and this deal alone completely changed the calculus for Qualcomm.”
The Amazon pact arrives weeks after Marvell Technology struck a comparable custom AI chip agreement with Google, which included the right to purchase a stake worth up to $12.2 billion in Marvell.
For Qualcomm, long identified with wireless chips and Snapdragon processors, the deal represents tangible progress in its push to reduce dependence on the smartphone market amid weakening handset demand and rising component costs.
The company also faces the eventual loss of its Apple modem business, making diversification into cloud and data center infrastructure an increasingly urgent strategic priority.
Qualcomm’s most recent quarterly revenue fell 4% to $9.95 billion for the period ending in June, weighed down by a 20% drop in handset revenue that overshadowed gains in automotive and IoT segments.
Its core QCT (Qualcomm CDMA Technologies) division contributed $8.50 billion, representing approximately 85.5% of total revenue, while QTL licensing accounted for 12.9% and the Data Center business made up the remaining portion.
Retail investor sentiment on Stocktwits flipped from bearish to bullish following the news, with QCOM ranking among the platform’s top three trending tickers, as one trader called Qualcomm “The Dark Horse” in the AI chip race.
QCOM stock has gained approximately 2% so far this year and is up more than 10% over the past 12 months, with analysts now watching closely to see whether the Amazon partnership accelerates that momentum further.
