Qualcomm has announced a landmark partnership with Amazon Web Services that could see the cloud giant purchase up to $60 billion in Qualcomm AI data centre chips and related products, making Amazon one of the most consequential customers in the chipmaker’s effort to diversify beyond smartphones and challenge Nvidia in the AI infrastructure market.
As part of the deal, Qualcomm has issued Amazon warrants to acquire 25 million shares at a fixed price of $161.26 per share — a total potential investment of approximately $4 billion. The warrants vest in tranches tied to commercial milestones and product purchases, and expire in September 2036. The agreement was confirmed in a filing with the Securities and Exchange Commission. Qualcomm shares rose more than 4% on the news.
The two companies will collaborate across multiple generations of customised silicon specifically focused on AI inference — the fast-growing market segment centred on running trained AI models rather than training them. They will also jointly develop high-speed optical connectivity technologies, including solutions supporting up to 1.6 terabits per second of bandwidth, to meet the escalating connectivity demands of large-scale AI data centres. As part of the expanded relationship, Qualcomm plans to deepen its use of AWS infrastructure for chip design workloads, targeting a reduction in development cycle times.
What the Deal Means for Qualcomm
The partnership with Amazon is the clearest validation yet of Qualcomm’s push into data centre AI. The company has spent the past year courting hyperscalers with custom AI chips and its new Dragonfly C1000 CPU — a data centre central processing unit built for agentic AI workloads and optimised for performance per watt. Meta was announced as an early customer for the Dragonfly C1000 in June, with production scheduled for 2028. Amazon’s agreement positions Qualcomm alongside Microsoft and Meta as hyperscaler backers of its AI chip ambitions.
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Qualcomm has set a target of $15 billion in data centre chip revenue by fiscal 2029. “The deal is exactly the kind of development that Qualcomm needed to reassure the market that the lofty data-center ambitions they set for themselves could indeed be met,” said Bob O’Donnell, chief analyst at TECHnalysis Research.
The deal arrives as Qualcomm faces headwinds in its core smartphone business. The company is navigating the eventual loss of its Apple modem contract, rising component costs, and weaker handset demand globally. Broadening its revenue base into AI infrastructure is no longer optional — it is existential strategy.
Why CPUs Are Gaining Ground in the AI Market
Qualcomm’s AI data centre strategy centres on CPUs rather than the GPUs that have made Nvidia the world’s most valuable company. While GPUs excel at training large AI models through massively parallel computation, CPUs are proving increasingly critical for AI inference — the process of running trained models to generate outputs. CPUs handle sequential general-purpose tasks that inference workloads increasingly require. Bank of America estimates the data centre CPU market could more than double from $27 billion in 2025 to $60 billion by 2030.
Intel and AMD are already seeing surging demand for their data centre CPUs. Nvidia itself introduced new agentic-optimised CPUs in March. Qualcomm’s entry into this market — backed by Amazon’s commercial commitment and $4 billion in warrant exposure — establishes a meaningful third option for hyperscalers seeking alternatives to Nvidia’s dominance.
The agreement also parallels a deal Marvell Technology struck weeks earlier with Alphabet’s Google, which gave Google the right to acquire a stake worth up to $12.2 billion in exchange for a custom AI chip collaboration. The pattern of chipmakers issuing large stock warrants to hyperscaler customers in exchange for long-term product commitments is becoming a defining financial structure of the AI infrastructure buildout.
Amazon’s own custom chip business has grown rapidly this year, reaching an annualised revenue run rate of over $25 billion by the end of the June quarter — making it a significant growth driver within AWS. The Qualcomm partnership allows Amazon to add another supplier of customised silicon alongside its own Graviton and Trainium chip families.
Qualcomm CEO Cristiano Amon described the collaboration as bringing “decades of leadership in advanced processing and power-efficient compute to deliver breakthrough performance and enable the next generation of AI infrastructure.” AWS vice president Prasad Kalyanaraman called it a reflection of “our shared commitment to pushing the boundaries of what’s possible.”
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