Qualcomm CEO Cristiano Amon had been teasing a big hyperscaler deal for months. On Tuesday, Sept. 8, the mystery customer was revealed: Amazon.
Qualcomm (QCOM) and Amazon (AMZN) announced a multi-generational collaboration to build custom AI chips and next-generation optical networking for AWS data centers. QCOM jumped more than 9% in premarket trading, hitting as high as 10% during the session.
The stock had slipped about 1% in 2026 before the announcement, with an August rebound only partly offsetting losses tied to weaker smartphone demand.
The deal covers custom silicon built for AI inference, spanning multiple chip generations. It also includes optical connectivity reaching up to 1.6 terabits per second, using technology Qualcomm gained through its $2.4 billion acquisition of Alphawave Semi, which closed in December 2025.
Qualcomm will also expand its own use of AWS infrastructure, including Amazon Bedrock, to speed up chip design. The two companies are now customer and vendor in both directions.
The financing detail is where it gets interesting. Qualcomm will issue Amazon a warrant to buy up to 25 million QCOM shares at $161.26 each. That stake is worth roughly $4 billion. Of that, 3.75 million shares vest immediately, and the warrant expires in 2036.
Amazon could spend up to $60 billion on Qualcomm products and services over 10 years for the full warrant to vest. Bernstein noted the deal gives Qualcomm high confidence to meet its financial targets, though it flagged the deal does not appear incremental to existing guidance.
This structure mirrors what AMD did with OpenAI, where AMD granted a warrant for up to 160 million shares in exchange for a multi-gigawatt chip supply deal.
Custom AI chip design is controlled by a small number of players. Broadcom and Marvell handle the large majority of hyperscaler custom silicon work.
Amazon’s existing Trainium chips already lean on Marvell for parts of manufacturing and interconnect work. Analysts at SemiAnalysis have flagged Marvell as a potential loser if Amazon diversifies its chip suppliers.
The deal also gives Qualcomm a foothold as it races to reduce its reliance on smartphones. Apple’s modem supply contract, long Qualcomm’s largest single revenue source, expires in March 2027.
Qualcomm has set a target of more than $15 billion in data center revenue by fiscal 2029, up from roughly $5 billion projected for fiscal 2027. In June, the company raised its fiscal 2029 non-handset revenue target to $40 billion from a prior $22 billion goal.
ASIC-based AI servers are projected to reach 27.8% of total AI server shipments in 2026, nearly triple the growth rate of GPU servers.
Bernstein holds a $165 price target and Market Perform rating. Baird raised its target to $400, maintaining an Outperform rating. Rosenblatt initiated with a Buy and a $235 target. The stock currently trades at $174.09.
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