Key Points
Qualcomm is targeting more than $15 billion in AI data-center revenue by fiscal 2029.
Meta and Microsoft are already signed on as customers.
Qualcomm nearly doubled its non-handset revenue target to $40 billion by 2029.
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Qualcomm (NASDAQ: QCOM) is best known for the chips and wireless technology inside smartphones. At its Investor Day in New York City, the company made the case that its next major growth engine could come from a very different market: AI data centers.
That message ran through much of the event. Qualcomm is not walking away from handsets, but management wants investors to look at a wider set of growth markets, including edge AI, automotive, industrial applications, data centers, and eventually 6G.
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Qualcomm Lays Out Its Next Chapter
CEO Cristiano Amon framed the shift as Qualcomm’s “next chapter,” saying the company is accelerating its edge diversification strategy, introducing a roadmap for next-generation AI data centers, and evolving into a platform company.
CFO and COO Akash Palkhiwala also put the transition in historical terms. He said Qualcomm “started off by inventing 3G,” then helped lead the 4G and 5G eras. Today, he said, Qualcomm is “more of a computing company” than a connectivity company.
Palkhiwala also described the current phase as a move from devices to both cloud and devices. “We’re going to go from being a devices company to being a cloud and device company,” he said.
Modular Adds the Software Layer
Just hours before the event, Qualcomm confirmed its planned acquisition of Modular, an AI software start-up, for approximately $3.9 billion.
The deal adds a software layer to Qualcomm’s AI strategy. Modular’s software lets developers build and deploy AI models across any chip architecture without rewriting code for each one. The company’s tech helps AI run more efficiently across different hardware architectures, including CPUs, GPUs, NPUs, and custom chips. That gives Qualcomm a clearer software angle alongside its data-center and edge AI chip roadmap.
AI Data Centers Take Center Stage
AI data centers were the largest new growth target Qualcomm presented to investors. Management set a goal of more than $15 billion in data-center revenue by fiscal 2029. If Qualcomm reaches that target, data centers would become a major new business for a company still widely associated with smartphones.
Qualcomm also pointed to revenue it expects sooner. Palkhiwala said the company will have “two hyperscaler customers that are at global scale” driving at least $1 billion of revenue within the year.
The company paired those targets with new data-center products and customer relationships. Qualcomm revealed its Dragonfly C1000 CPU, designed for AI data-center workloads, with a 250-plus core count, high memory bandwidth, PCIe Gen 7, and CXL connectivity.
Meta (NASDAQ: META) was the clearest named data-center customer. Qualcomm announced a multigeneration collaboration to supply data-center CPUs, with the Dragonfly C1000 expected to support Meta’s next-generation server fleet. Production is planned for the second half of 2028.
Meta CEO Mark Zuckerberg tied the partnership to power efficiency. He said Qualcomm has spent decades figuring out how to get “the most performance out of every watt,” and said Meta entered a multigenerational collaboration for Qualcomm to supply CPUs to its data centers.
Microsoft (NASDAQ: MSFT) was also tied to Qualcomm’s data-center roadmap. Qualcomm highlighted Microsoft’s support for its high-bandwidth compute technology, or HBC, which is designed to improve cost and performance for next-generation AI infrastructure. Microsoft said Qualcomm’s HBC architecture could unlock “significant improvements in cost and performance” for next-generation AI infrastructure.
Qualcomm’s data-center pitch is built around power-efficient computing. Management is arguing that the same design discipline that made the company a leader in mobile devices can matter in data centers, where AI workloads are putting more pressure on power use, infrastructure costs, and system performance.
Qualcomm also highlighted its work with Google (NASDAQ: GOOG) on on-device AI, with Rick Osterloh, SVP at Google, saying Google is combining Gemini models and Android intelligence with Snapdragon silicon.
Handsets Still Matter, but Qualcomm Wants a Broader Revenue Mix
Smartphones remain central to Qualcomm’s business. Snapdragon chips are still important in premium Android devices, and handsets continue to be a major part of the company’s revenue base.
But Investor Day showed how aggressively management wants to expand the non-handset business. Qualcomm raised its fiscal 2029 non-handset revenue target to $40 billion, nearly double its prior target.
Data centers are the largest new piece of that plan, but they are not the only ones. Qualcomm also pointed to a $10 billion automotive revenue target by fiscal 2029, along with opportunities in IoT, industrial AI, robotics, PCs, and on-device AI.
The mix shift is important because it gives investors more than one way to judge Qualcomm’s growth. The company is still exposed to handset cycles, but management is trying to build larger businesses around AI infrastructure, edge devices, and automotive technology.
Image source: Getty Images
Competition Remains Part of the Data-Center Question
Qualcomm’s data-center targets are ambitious, but the market is already crowded. Nvidia remains the dominant company in AI accelerators. Broadcom and Marvell are important players in custom silicon and networking. Large cloud companies such as Amazon and Google are also building more of their own chips.
That competitive backdrop matters because Qualcomm is not entering an empty market. To make the data-center plan work, it will need to show where its technology is differentiated, how quickly customers adopt it, and whether the business can become profitable at scale.
When asked if Qualcomm is too late to the data center business. Cristiano responded by saying, “It’s never too late for Qualcomm. This is a market that moves very, very fast. If you have technology leadership, there’s room for you.”
What Investors Should Watch Now
At Investor Day, Qualcomm provided greater clarity on its AI data-center strategy by announcing a fiscal 2029 revenue target, securing two global hyperscaler customers, establishing named partnerships with Meta and Microsoft, and its pending Modular acquisition to enhance its software capabilities.
Key areas for investors to watch moving forward are the pace of hyperscaler revenue growth, Meta’s Dragonfly C1000 deployment, the impact of Microsoft’s HBC partnership, Modular’s role in the software platform, and Qualcomm’s ability to maintain strong margins in a competitive market. The company’s next challenge is to convert its data-center strategy into sustained revenue growth, long-term customer adoption, and profitability that extends beyond its traditional smartphone chip business.
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Eric Trie has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Broadcom, Marvell Technology, Meta Platforms, Microsoft, Nvidia, and Qualcomm. The Motley Fool has a disclosure policy.
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