Qualcomm shares climbed roughly 10% on Monday after the chipmaker unveiled a data center partnership with Amazon valued at about $4 billion, pushing the company deeper into a market dominated by Nvidia.
Under the agreement, the two companies will develop custom chips for artificial intelligence data centers. The deal gives Qualcomm a foothold in server infrastructure at a moment when demand for AI computing hardware has driven record spending across the technology sector.
The move continues a strategy Qualcomm set out earlier, when it began building AI-focused processors for server clients. The company has long relied on smartphone chips for most of its revenue and has sought new sources of growth as handset sales flatten.
The rally offered relief to investors. Qualcomm shares had lagged the wider semiconductor rally through the year, missing gains enjoyed by peers tied more directly to the AI buildout. Nvidia and Broadcom have captured much of that spending, leaving Qualcomm on the sidelines.
Amazon operates one of the world’s largest cloud businesses through Amazon Web Services and has invested heavily in designing its own silicon to reduce reliance on outside suppliers. Its Trainium and Inferentia chips already power parts of its AI infrastructure. Adding Qualcomm expands the roster of partners feeding that effort.
The data center chip market remains concentrated. Nvidia controls the bulk of AI accelerator sales, and its graphics processors have become the standard for training large models. Rivals including Advanced Micro Devices and Broadcom have pursued custom designs to chip away at that lead.
For Qualcomm, the Amazon arrangement links it to a customer with vast purchasing power and a clear appetite for tailored hardware. Custom chip projects typically lock suppliers into multi-year development cycles, providing steadier revenue than the cyclical smartphone business.
The company had faced pressure earlier in the year over softer guidance and questions about its exposure to memory supply constraints. Monday’s announcement shifted attention toward its longer-term data center ambitions.
Neither company detailed the full timeline for chip production or the specific product lines involved. The $4 billion figure reflects the scope of the collaboration across multiple projects.
The agreement adds Qualcomm to a growing list of firms racing to supply the hardware behind the AI expansion, a market where order books have swelled and manufacturing capacity has become a competitive constraint.