Qualcomm strikes AI chip deal with Amazon, offers right to buy about $4 billion in stock

On September 8, Qualcomm announced a long-term partnership with Amazon, potentially allowing the cloud giant to purchase up to $60 billion worth of Qualcomm's AI data-center chips and related products. The agreement includes warrants worth about $4 billion, which will vest with product purchases and allow Amazon to buy shares at $161.26 per share.

Qualcomm's shares rose more than 3 percent following the announcement. This deal demonstrates Qualcomm's efforts to diversify its revenue streams beyond smartphones as it faces potential losses in its Apple modem business, rising component costs, and weaker handset demand. The agreement is expected to drive Qualcomm's data-center chip revenue to $15 billion by 2029.

Bob O Donnell, chief analyst at TECHnalysis Research, stated that the partnership is a significant development that reassures the market about Qualcomm's data-center ambitions.