Qualcomm Seals Multi-Generational Amazon AI Chip Deal With $4 Billion Share Warrant

Qualcomm announced a multi-generational collaboration with Amazon on Tuesday to develop customized silicon for Amazon Web Services AI data center infrastructure, with an initial focus on large-scale AI inference. The two companies will also work together on advanced optical connectivity for data centers, including links up to 1.6 terabits, using Qualcomm's SerDes and optical digital signal processor technology. Qualcomm additionally plans to expand its use of AWS services, including Amazon Bedrock, for chip-design and electronic design automation workloads to shorten its development cycles.

As part of the agreement, Qualcomm issued Amazon a warrant to acquire up to 25 million QCOM shares at an exercise price of $161.26 per share, implying a total potential investment of roughly $4.03 billion. The warrant expires in 2036 and is tied to Amazon purchase milestones totaling as much as $60 billion, rather than being an unconditional equity grant. Qualcomm said it expects to begin recognizing revenue from Amazon in the December quarter.

CFO and COO Akash Palkhiwala, speaking at the Goldman Sachs Communacopia and Technology Conference, called the deal a landmark for Qualcomm and said the company is confident about reaching its $5 billion data center revenue target. MarketBeat separately cited a $15 billion data center goal referenced in conjunction with the deal. Palkhiwala also disclosed a new partnership with a second, unnamed hyperscaler. The CFO noted the smartphone market is at a cyclical low point and that higher memory prices have had only limited impact on the premium smartphone segment. Qualcomm also expects to become the largest chip supplier to the automotive industry next year.

Qualcomm shares initially surged as much as 10 percent in early Tuesday trading before paring gains to roughly 4 to 5 percent by midday, a notable move for a stock that had largely missed the broader chip sector rally in 2026. Options activity reflected the enthusiasm, with a 4.9-to-1 call-to-put ratio following the announcement. Rival Broadcom ticked modestly higher on the news while Amazon shares held flat.