Business
Qualcomm Shares Jump on $15 Billion Data Center Forecast
The company expects its data center business to generate $15 billion in annual revenue by 2029 as the chipmaker expands beyond smartphones and benefits from growing demand for AI infrastructure, sending its shares sharply higher.
Key Insights
- Qualcomm expects its data centre business to generate $15 million in revenue by the year 2029.
- Microsoft and Meta are AI chip customers.
- Pushed shares up over 12% in after-hours following the news.
Qualcomm is counting on its data center business to pull in $15 billion in revenue by 2029 as it moves beyond smartphone chips alone. The estimate caused Qualcomm shares to jump more than 12% in after-hours trading.
The data centre business should drive $5B in revenue by fiscal 2027, with $1B from new custom-chip customers, Chief Financial Officer Akash Palkhiwala said.
The company also expects chips outside its non-smartphone businesses to generate $40 billion by 2029, up from earlier estimates of $22 billion. At that point, smartphone chips are projected to make up just a third of Qualcomm's chip revenue.
Qualcomm AI chips that Microsoft and Meta are using
Qualcomm reports Microsoft and Meta-Platforms will use its new AI chips. And it will make custom chips for two unidentified hyperscale customers.
Qualcomm will make the chips, called High Bandwidth Compute (HBC) chips and it uses cheap memory typically found in smartphones and laptops rather than the more pricey memory used in many AI data centre chips. Meta will use Qualcomm’s Dragonfly C1000, a processor designed for AI data centres.
Expansion Beyond Smartphones
As the smartphone market feels pressure from shortages in memory chips and major customers like NVIDIA. The company expects to start shipping its processors and other AI chips for datacenters by year's end.
It also said it’s working on three types of chips, central processing units (CPUs); inference accelerators and custom ASICs (application-specific integrated circuits).
Competitive Market
Qualcomm moves into the ultra-competitive AI datacentre market controlled by NVIDIA, Cerebras, Amazon and Google. Earlier this week, analysts at Bank of America estimated Qualcomm’s data centre unit could earn around $2 billion to $5 billion in annual sales by fiscal 2027 and 2028.
Arm Holdings, the designer responsible for technology in many of Qualcomm's chips, gained about 5% gain after hours following Qualcomm’s outlook.
Source: Reuters
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