Qualcomm Secures Major AI Chip Partnerships with Microsoft and Meta Ahead of Q3 Earnings
Key Takeaways
- •Qualcomm has secured agreements with major cloud providers, including Microsoft and Meta, to supply AI-optimized data center processors.
- •The company has set a target to achieve at least $15 billion in AI data center revenue by fiscal year 2029.
- •Qualcomm's new chips reportedly offer up to eight times greater power efficiency compared to traditional GPU-centric configurations.
- •In its most recent quarter, Qualcomm reported earnings of $2.65 per share, surpassing analyst estimates of $2.56.
- •Multiple Wall Street firms have recently upgraded Qualcomm's stock or raised their price targets, reflecting increased analyst optimism.
Qualcomm (QCOM) shares are trading in the $173–$175 range, well below the 52-week high of $259.92, but the semiconductor company has recently announced AI chip partnerships that could significantly alter its trajectory in the data center market.
The chipmaker has secured agreements with three leading hyperscale cloud providers to supply AI-optimized data center processors. Microsoft and Meta have been publicly confirmed as strategic partners. The development marks a notable strategic pivot for Qualcomm, which generated zero data center revenue just twelve months ago and has historically derived the bulk of its revenue from mobile handset chips, including its Snapdragon lineup.
Chip Offerings and Partner Deployments
The partnerships center on Qualcomm's latest silicon portfolio, which includes the AI200 and AI250 processors as well as the newly unveiled Dragonfly AI300 inference accelerator. Meta plans to deploy the Dragonfly C1000 CPU across its upcoming server infrastructure.
Microsoft's Azure cloud platform intends to integrate Qualcomm's HBC (high-bandwidth compute) processors alongside the AI200 and AI250 chips, with deployment expected to begin in 2026.
A central selling point for these hyperscale partners is power efficiency. Qualcomm states that its architecture achieves 4 to 8 times greater computing performance per watt compared with GPU-centric configurations, accomplished through direct integration of processing cores with high-bandwidth memory. This advantage has grown increasingly relevant as major technology companies confront rising data center power consumption — a constraint that has become a pressing operational challenge for hyperscalers expanding AI infrastructure at scale. NVIDIA currently dominates the AI data center accelerator market, and AMD has also been investing heavily in its Instinct MI300 series to compete, making Qualcomm a new entrant in a field with entrenched incumbents.
Targeting $15 Billion in Data Center Revenue
Qualcomm has set a revenue target of at least $15 billion from AI data center operations by fiscal year 2029. For context, the company reported $44.3 billion in total revenue during fiscal 2025.
Reaching this goal would require Qualcomm to capture approximately 10% of the global AI processor market, which Precedence Research projects will grow to $146 billion by 2029.
The company also expects its non-smartphone divisions — including automotive technology and IoT solutions — to expand at a compound annual growth rate of 40% through 2029.
Recent Financial Results
Qualcomm's most recent quarterly results delivered earnings per share of $2.65, exceeding analyst expectations of $2.56. Revenue came in at $10.60 billion, meeting projections but representing a 3.5% year-over-year decline.
Management issued Q3 2026 EPS guidance of $2.10 to $2.30, with a full-year EPS projection of $7.97.
Institutional Activity and Analyst Coverage
Institutional interest continues to grow. NewEdge Wealth LLC increased its Qualcomm holdings by 7.0% during the first quarter, purchasing 19,412 additional shares to bring its total position to 298,683 shares valued at approximately $38.5 million.
Analyst coverage has intensified in recent weeks. In late June, Barclays upgraded QCOM from underweight to overweight. Benchmark raised its price target from $225 to $300, while Wells Fargo increased its target from $230 to $265. Cantor Fitzgerald maintained a neutral rating with a $220 price target.
Across 38 analyst ratings, the consensus recommendation stands at Hold, with an average price objective of $219.76 — representing roughly 26% upside from current levels.
Insider Transactions
On the insider front, CEO Cristiano Amon sold 10,000 shares at $180.00 on May 4th under a pre-established 10b5-1 trading plan. EVP Heather Ace sold 3,200 shares at $177.82 on the same date. Company insiders have collectively sold 21,721 shares valued at approximately $4 million over the past 90 days.
Qualcomm pays a quarterly dividend of $0.92 per share, scheduled for distribution on September 24th, yielding approximately 2.1% annually.
The company's next quarterly earnings announcement is scheduled for July 29th.
