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Qualcomm (QCOM) is stepping into the artificial intelligence (AI) arena, a space dominated by Nvidia (NVDA) and Advanced Micro Devices (AMD). Long known as a dominant player in smartphone chips, Qualcomm launched two new AI-focused accelerators targeting the data center market. The company’s announcement of its AI200 and AI250 accelerators sent its stock soaring 11.1% on Oct. 27, reflecting renewed investor confidence that Qualcomm may be poised for a new phase of growth beyond mobile. Qualcomm Breaking Out of the Smartphone Mold For years, Qualcomm’s fortunes have been closely tied to the smartphone industry. The company’s diversification into automotive, IoT, and now, data centers, is a strategic attempt to reduce reliance on mobile revenues, especially after losing Huawei as a major customer. The Qualcomm AI200 and AI250 are designed to deliver high performance per dollar and per watt, which could drive its adoption. Further, the timing of Qualcomm’s expansion into AI chips couldn’t be better. Investments in the sector are growing rapidly, with cloud giants racing to build systems capable of handling massive generative AI models and chatbots. Qualcomm’s upcoming chips, slated for commercial availability in 2026 and 2027, are designed to capture AI-driven demand. But breaking into the AI data center market won’t be easy. Nvidia dominates the space, with AMD slowly gaining share with its next-generation AI accelerators. Further, the cost of switching AI platforms makes it difficult for new players to gain share quickly. However, Qualcomm’s rack-based solutions, equipped with direct liquid cooling features, focus on energy efficiency and cost-effective performance, provides a strong competitive advantage. Encouragingly, Qualcomm is already in discussions with major potential customers, including one leading hyperscaler, suggesting early traction in a market that often takes years to penetrate. Should these engagements convert to design wins, management expects meaningful revenue contributions from the AI data center business to begin around fiscal 2028. Qualcomm’s Strategic Acquisitions and Partnerships Qualcomm’s ambition in the AI data center space is supported by its pending acquisition of Alphawave IP Group, a specialist in high-speed connectivity and compute technologies. The deal, expected to close in early 2026, will enhance Qualcomm’s data center design capabilities and complement its core processor technologies. This acquisition, combined with its in-house development of NPU-based accelerators and AI-focused SoCs, strengthens its vertical integration strategy. Adding to its global footprint, Qualcomm has also signed a memorandum of understanding with HUMAIN to develop AI data centers in Saudi Arabia. The partnership targets an initial 200-megawatt capacity using Qualcomm’s AI200 and AI250 racks by 2026, offering a significant growth opportunity. Opportunities Beyond the Data Center Market While the data center business could become a major new revenue stream, the company is poised to capitalize on the future of AI in personal and physical devices. Smart glasses, wearables, and even robotics are emerging as significant growth opportunities for Qualcomm’s low-power, high-efficiency chips. With its Snapdragon platform offering 5G connectivity, power-efficient processing, and on-device AI capabilities, Qualcomm is uniquely equipped to capitalize on demand stemming from a new generation of consumer devices. Is Qualcomm Stock a Buy? While Wall Street currently maintains a “Moderate Buy” rating on Qualcomm, the market may be underestimating the long-term potential of its transformation. The company’s automotive and IoT segments are already showing steady momentum, while its new AI initiatives promise to open a fresh multi-year growth runway. With automotive partnerships like BMW’s upcoming ADAS launch and a newly strengthened alliance with Xiaomi (XIACY), Qualcomm is laying the foundation for diversified, resilient revenue streams. In short, Qualcomm’s story is evolving from a smartphone chipmaker to a comprehensive AI technology leader. The transition won’t happen overnight, but the strategy appears appealing and the timing is favorable. As AI reshapes the computing world, Qualcomm’s entry into the race could accelerate its growth, making it a Buy for long-term investors.
