Qualcomm (QCOM) stock is up 66% as it targets Nvidia’s Data Center Crown

TLDR

• Qualcomm has acquired AI software company Modular in an all-stock deal worth nearly $4 billion, adding AI inference software and a new programming language to its portfolio.
• The company debuted its Dragonfly C1000 CPU platform and HBC inference chip at its investor day, targeting the data center market.
• Meta has signed a multi-year deal to use Qualcomm processors in its data centres, with Microsoft also named as a potential client for HBC.
• Qualcomm acquired Alphawave Semi in December, adding high-speed communication chips to the data center and a dedicated silicon design lab.
• Management expects $15 billion in AI infrastructure revenue by fiscal 2029 and $1.7 trillion in total addressable market by 2030.

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Qualcomm (QCOM) stock is up 66% over the past three months as the chipmaker makes an aggressive push into AI data centers, a market dominated by Nvidia (NVDA).

Qualcomm Incorporated, QCOM

QCOM was trading at $189.36 at the time of writing, down 7.58% on the day, but still well above its 52-week low of $121.99. Its price-to-earnings ratio is just 21, compared to the technology sector average of 44.

The past week has been busy. At his Investor Day presentation, CEO Cristiano Amon explained this Qualcomm It is no longer satisfied with being a company specialized in manufacturing smartphone chips.

The goal: to have smartphone chips account for a third of total sales by 2029. In the last fiscal year, non-smart chips already accounted for 28% of chip revenue.

Acquisitions do the heavy lifting

In December, Qualcomm bought Alphawave Semi, acquiring high-speed communication chips for the data center and a dedicated silicon design lab. Alphawave co-founder Tony Bialis is executive vice president of data center technology at Qualcomm. These networking chips are already on sale, and two custom chips customers have signed on and contributed to sales in the next fiscal year.

Then came the standard deal. Qualcomm announced the acquisition of the artificial intelligence software company in an all-stock deal worth approximately $4 billion. Modular can run any AI model across different hardware platforms. The deal also includes Chris Lattner, co-founder and CEO of Modular, who is highly regarded in software development circles.

This modular purchase is important because it gives Qualcomm a software layer — something Nvidia has long used as a competitive moat through its CUDA ecosystem.

New chips, new customers

Qualcomm unveiled the Dragonfly C1000 CPU at its investor day. Meta is the first confirmed data center customer for this segment, under a multi-year agreement.

It also introduced the HBC inference chip platform. Microsoft CEO Satya Nadella appeared in a video at the event, describing HBC’s “high-bandwidth memory and integrated compute” as unlocking improvements in cost and performance for AI infrastructure. Microsoft may be a customer, although details have been limited.

The first generation HBC will be available for customer sampling in 2027. The second generation will follow in 2028.

The strategic logic is clear and straightforward. Nvidia has built its data center dominance on four pillars: AI accelerator chips, CPUs, high-speed networking, and software. Qualcomm now has versions of these four in the pipeline or in development.

The AI ​​inference market is where Qualcomm sees its opening. Inference — running AI models rather than training them — is becoming the biggest workload as organizations roll out AI agents. A recent study by Google, Microsoft, and leading university researchers found that AI coding agents use roughly 1,000 times more inferential computing than humans doing the same task.

Qualcomm management estimates Artificial intelligence infrastructure Revenue will exceed $15 billion by fiscal 2029, up from almost zero today. The company also expects the total addressable market to reach $1.7 trillion by 2030, combining data centers, edge, and other opportunities.

HBC chipset sampling begins in fiscal 2027, and Qualcomm’s entire data center portfolio is expected to be fully ramped up over the next two years.