Amazon has agreed to buy up to $60 billion worth of Qualcomm's AI data center chips over the next decade, and in exchange the San Diego chipmaker has handed Amazon the right to buy a chunk of its stock. Qualcomm shares closed up more than 3% at $174.09 on Monday after the companies confirmed the multi-generational partnership on Tuesday, one of the biggest bets yet on Qualcomm's push to become a major player in AI data centers rather than just smartphones.
Under the terms disclosed Monday, Amazon received the right to buy up to 25 million shares of Qualcomm stock at $161.26 per share, with 3.75 million of those shares made available immediately, according to The San Diego Union-Tribune. Amazon can acquire additional shares as it hits agreed-upon milestones, and separate SEC filings confirm the warrant has a cashless exercise option expiring in 2036. Bernstein analyst Stacy Rasgon estimated that the immediately vested shares alone imply an initial $9 billion Amazon sales commitment, per the Union-Tribune.
A Deal That Goes Beyond Chips
The agreement was announced at a Goldman Sachs investors summit in San Francisco on Tuesday, September 8, 2026, and covers far more than standard processors. Beyond compute silicon, the companies will co-develop high-speed optical connectivity components capable of transferring up to 1.6 terabits per second across Amazon Web Services data center networks, using Qualcomm's SerDes and optical digital signal processor technology, according to Invezz.
The arrangement runs both directions. Qualcomm will expand its own use of Amazon Web Services infrastructure, including Amazon Bedrock, to run electronic design automation workloads meant to speed up its future chip design cycles, Invezz reports. Qualcomm CFO and COO Akash Palkhiwala said the company is executing on the strategy it laid out to investors, adding pointedly that Qualcomm used to be a smartphone company.
The U.S. Department of Energy has a Microgrids R&D Strategic Plan.
Racing To Replace Smartphone Revenue
The stakes for San Diego's largest chipmaker are significant. Qualcomm has projected that smartphones will shrink from roughly 70% of its revenue to about one-third by 2029, and executives have said data center deals are meant to fill that gap. Apple is expected to complete its split from Qualcomm modems within seven months, part of a long-planned transition to in-house chips.
Qualcomm has set a target of $5 billion in data center revenue by 2027 and $15 billion by 2029. Production of Amazon's custom chips is already underway, with initial revenue recognition expected in Qualcomm's December quarter, according to Investing.com. Qualcomm is also producing and shipping chips for Humain and other customers, and the company said Monday that a near-term data center benchmark it had set has almost been met.
Meta, Modular, and a Broader Hyperscaler Push
Amazon is not Qualcomm's only major data center customer. At its Investor Day in June, Qualcomm unveiled its data center portfolio, including the 250-core Dragonfly C1000 server CPU built on its custom Oryon architecture, and announced Meta as an anchor customer set to begin buying custom Qualcomm silicon starting in 2028, per Qualcomm. Terms of the Meta deal were not disclosed. Qualcomm also said Monday it has a strong engagement with another, unnamed hyperscaler beyond Amazon and Meta.
That same month, Qualcomm pursued a $3.9 billion acquisition of AI software startup Modular to integrate its MAX inference engine and Mojo programming language, part of an effort to build software tools that run across different hardware and compete with Nvidia's CUDA ecosystem, as Hoodline previously reported. Qualcomm is also leaning on its proprietary High Bandwidth Compute technology, which stacks low-power memory directly onto logic dies to reduce energy use during AI inference, positioning the chips as a lower-cost alternative to traditional GPU setups, according to Qualcomm's own OnQ blog.
Qualcomm's push beyond mobile chips has an earlier precedent: in 2016, the company said its planned NXP acquisition would accelerate its strategy of extending mobile technology into new markets, according to Qualcomm. That earlier diversification effort did not close: Qualcomm announced on 25 Jul 2018 that it was terminating the NXP acquisition and would pay a $2 billion termination fee on July 26, according to Qualcomm.
Analysts See A Real Commitment, Not A Test Run
Industry analysts framed Monday's announcement as evidence Amazon is serious about Qualcomm as a long-term supplier rather than a pilot vendor. Futurum Group analyst Daniel Newman said Amazon does not take equity in a vendor it plans to merely test-drive, and separately said investors can stop mourning Apple's departure. Rasgon said the Amazon deal does not appear to be incremental to Qualcomm's existing financial targets, suggesting it represents genuinely new business rather than a repackaging of prior guidance.
BiGGo also discussed the Qualcomm-Amazon deal. The Amazon news builds on a hint Qualcomm dropped during its April earnings call, when it first confirmed shipping custom silicon to an unnamed leading hyperscaler for late 2026, as Hoodline reported at the time in its piece on Qualcomm's after-hours rally.
What It Means For San Diego
Qualcomm is the region's largest publicly traded company and telecommunications employer. A bigger, more diversified data center business could reinforce that role even as the company's smartphone chip business shrinks relative to its overall revenue.
Some questions remain open. It is not yet clear how quickly Amazon will exercise additional warrant tranches beyond the 3.75 million shares already vested, and how much Qualcomm's growth outside handsets will ultimately offset swings in its mobile chip business over the next several fiscal years. Qualcomm executives have not disclosed further specifics on the pace of the rollout beyond confirming that chip production for Amazon is already underway.
