Qualcomm (QCOM), best known for its smartphone chips, made it clear at its New York Investor Day that its next major growth engine will come from AI data centers. Management emphasized that Qualcomm is not abandoning its handset business but wants investors to focus on broader growth markets, including edge AI, automotive, industrial applications, data centers, and 6G technologies.
Chief Executive Officer Cristiano Amon characterized this transformation as Qualcomm’s “next chapter,” stating that the company is accelerating its edge diversification strategy, rolling out a next-generation AI data center roadmap, and evolving into a platform-centric enterprise. Chief Financial Officer Akash Palkhiwala noted that Qualcomm began with the invention of 3G, led the 4G and 5G eras, and has now transitioned from a connectivity company to “more of a computing company,” and will move from a device company to a “cloud and device company” in the future.
On Investor Day, Qualcomm confirmed its acquisition of AI software startup Modular for approximately $3.9 billion. The company’s software allows developers to deploy AI models on any chip architecture without rewriting code, supporting a wide range of hardware including CPUs, GPUs, NPUs, and custom chips. This deal strengthens the software layer of Qualcomm’s AI strategy.
AI data centers represent the largest new growth target Qualcomm showcased. The company set a goal of exceeding $15 billion in data center revenue for fiscal year 2029. Palkhiwala indicated that two global hyperscale customers will generate at least $1 billion in revenue within the year. Qualcomm launched the Dragonfly C1000 CPU, designed specifically for AI data centers, featuring over 250 cores, high memory bandwidth, and support for PCIe Gen 7 and CXL interconnects. Meta (META) is the most definitive partner, with the two companies embarking on multi-generational collaboration. The Dragonfly C1000 is expected to support Meta’s next-generation server clusters, with production slated for the second half of 2028. Meta CEO Mark Zuckerberg stated that Qualcomm’s technical expertise in power efficiency facilitated this partnership. Microsoft (MSFT) also appeared on Qualcomm’s roadmap, supporting its High Bandwidth Computing (HBC) technology, with Microsoft stating that the architecture is expected to deliver “significant improvements in cost and performance” for next-generation AI infrastructure.
Qualcomm’s data center strategy is anchored in high-efficiency computing, with management believing that design principles from the mobile device space are equally applicable to addressing the power, cost, and performance challenges posed by AI workloads. Qualcomm is also collaborating with Google (GOOG) in on-device AI, with Google Senior Vice President Rick Osterloh stating that the company is combining Gemini models and Android intelligence with Snapdragon chips.
Smartphones remain Qualcomm’s core business, with Snapdragon chips holding a prominent position in high-end Android devices. However, management is aggressively expanding beyond handsets, raising the non-handset revenue target for fiscal year 2029 to $40 billion, nearly double its previous goal. Data centers represent the largest new segment, in addition to which the company has set a $10 billion automotive revenue target and is building out presence in IoT, industrial AI, robotics, PCs, and on-device AI. This shift gives investors more dimensions to evaluate Qualcomm’s growth; the company remains subject to handset cycles but is building new businesses around AI infrastructure and edge devices.
While Qualcomm’s data center targets are ambitious, the competitive landscape is fierce. At Investor Day, Qualcomm laid out its fiscal 2029 revenue targets, locked in two hyperscale customers, established named partnerships with Meta and Microsoft, and bolstered its software capabilities through the Modular acquisition. Going forward, key areas to watch include hyperscale customer revenue growth, Meta’s deployment of the Dragonfly C1000, the effectiveness of the Microsoft HBC partnership, the integration of Modular, and Qualcomm’s ability to sustain profit margins amid intense competition.
Overall, Qualcomm is transitioning from a mobile chip company to a platform-centric enterprise spanning cloud, edge, automotive, and other AI arenas, with data centers assigned a strategic role as the core growth engine. However, in the face of strong competition from Nvidia (NVDA) and an increasingly crowded market environment, whether Qualcomm can convert its technological strengths into sustainable market share and profitable contributions remains subject to execution validation.
