Qualcomm unveils AI chip, signs Meta as first customer
What's the story
Qualcomm's stock price skyrocketed by 15% in after-hours trading on Wednesday. The surge came after the semiconductor giant revealed a new AI chip for data centers and revised its fiscal 2029 non-handset revenue forecast from $22 billion to a whopping $40 billion. The company also revealed plans to generate $15 billion from data center sales and achieve total adjusted earnings of over $18 per share by 2029.
Product launch
Qualcomm's new data center CPU
Earlier on Wednesday, Qualcomm unveiled a new central processing unit (CPU) for data centers, the Dragonfly C1000. Meta will be using this CPU when Qualcomm starts production in 2028. Microsoft is also said to be a customer, as per a Reuters report. The chipmaker said that the new CPU was specifically designed for agentic AI and aims to deliver computing performance while minimizing power consumption.
Market expansion
Broader strategy to penetrate data center market
The announcement of the Dragonfly C1000 comes as part of Qualcomm's broader strategy to penetrate the data center market. The company has a roadmap for this fast-growing sector with several products, including an AI chip and a solution that will integrate multiple chips. CEO Cristiano Amon said they have been "just executing, collecting assets," and now feel ready to enter this new phase in the data center space.
Business connections
Qualcomm already has business with hyperscalers
Qualcomm CFO Akash Palkhiwala revealed in an interview that the company already has business with nearly every hyperscaler through its smartphone chips and other existing products. He said, "This is not a new relationship. It's the benefit of what we've delivered to them already on the edge, combined with the scale and the expertise."
Business expansion
Diversification into new sectors and acquisition of start-up Modular
Qualcomm is looking to diversify its business into cars, robots, and data centers. The company has expanded its "automotive design-win pipeline" to $65 billion and raised its revenue target to $10 billion by fiscal 2029. Qualcomm also announced the acquisition of Modular, a start-up that makes software for running AI applications on different chip architectures. The financial details of the deal remain undisclosed.