Qualcomm Shares rose 4% on Tuesday after the company announced a data center infrastructure partnership. Amazon Web services, big win as chipmakers take on challenges Nvidia in the artificial intelligence market.
As part of the deal, Qualcomm issued warrants to Amazon to acquire 25 million shares of its stock at a price of $161.26 per share, for a total investment of $4 billion, the company said in a filing with the Securities and Exchange Commission.
According to a press release about the technology agreement, Qualcomm will work with Amazon “across multiple generations of customized silicon” to help build AWS’ AI infrastructure, with a particular focus on inference.
“As AI workloads grow exponentially, driving unprecedented demand for compute, storage, networking, memory bandwidth, and energy-efficient infrastructure, this partnership brings together Amazon’s comprehensive, secure, and price-performance AI infrastructure with Qualcomm Technologies’ leadership in power-efficient processing, silicon design, and system-level integration,” the statement said.
Qualcomm is known for manufacturing processors that power smartphones and other mobile devices. But the company made headlines in June when it unveiled a central processing unit for data centers called the Dragonfly C1000, and announced that Meta would use it when it begins production in 2028.
The chipmaker says the new CPUs are built for agent AI and are focused on delivering computing performance without consuming too much power. At the time, Qualcomm said it was targeting $15 billion in data center sales in fiscal 2029 and pointed to a roadmap to conquer the market with several different products, including AI chips and products that work together.
Qualcomm is showing confidence from another hyperscaler by partnering with AWS. Like Meta, Amazon’s annual capital spending on AI infrastructure is in the hundreds of billions of dollars.
Qualcomm’s warrant against Amazon expires on September 3, 2036. The company said the shares will vest in tranches related to “the performance of certain commercial agreements” and the purchase of up to $60 billion worth of Qualcomm server chips and other technology.
Nvidia has emerged as the world’s most valuable company by dominating the market for graphics processing units (GPUs) needed to build advanced AI models and run the most demanding workloads. But now that CPUs are proving to be the key to AI, more chipmakers are joining the AI boom.
GPUs are ideal for training and running AI models because they have thousands of small cores that specialize in performing many operations simultaneously, whereas CPUs have fewer powerful cores that perform sequential general-purpose tasks.
Bank of America predicts that the CPU market could more than double from $27 billion in 2025 to $60 billion by 2030. intel and advanced micro device Both companies are seeing demand for data center CPUs skyrocket, and Nvidia announced new details about its agent-optimized CPUs in March.
Dion Harris, head of AI infrastructure at Nvidia, told CNBC at the time that “the CPU is becoming the bottleneck in terms of scaling this AI and agent workflow.”
—CNBC’s Katie Tarasov contributed to this report.
Spotlight: Qualcomm partners with AWS
