Qualcomm Shares Surge 20% Following AI Chip Launch and Earnings

Qualcomm shares experienced a remarkable surge of 20% on Monday, ultimately closing the day up 11%, following the announcement of its expansion into the data centre market. This unexpected rally sent ripples through Silicon Valley, intensifying competition with established players like Nvidia and AMD. The semiconductor giant unveiled its new line of artificial intelligence (AI) chips and rack-scale servers, marking a significant pivot from its traditional smartphone business.

The company’s latest offerings, the AI200 and AI250 platforms, are specifically designed to enhance AI workloads for enterprise and cloud customers. The AI200, which serves as both a standalone accelerator and a full server rack, is set to launch in 2026 and will feature a built-in Qualcomm CPU. The more advanced AI250 is scheduled for release in 2027, with expectations for a third model by 2028. These developments represent Qualcomm’s first direct entry into the lucrative data centre segment, which has been predominantly controlled by Nvidia and AMD.

In conjunction with the product launch, Qualcomm reported quarterly revenue of $10.37 billion and an adjusted earnings per share of $2.77, both figures surpassing Wall Street estimates. According to Yahoo Finance, the dual impact of robust earnings and the AI product announcement propelled Qualcomm shares upward, with investors expressing optimism about the company’s strategic diversification beyond smartphones.

Qualcomm’s entry into the AI chip market positions it as a direct competitor to Nvidia’s leading AI accelerator business and AMD’s growing presence in the sector. Both competitors have seen substantial growth due to rising global demand for high-performance computing chips, a trend fueled by the rapid advancement of AI technologies.

The AI200 and AI250 chips are focused on inference processing, a critical stage where trained AI models are executed. Analysts highlight that this segment is currently less saturated and is expanding more rapidly than the training market, where Nvidia maintains a significant advantage. Qualcomm asserts that its new systems will offer energy-efficient and cost-effective solutions, enabling data centre operators to manage increasingly complex AI workloads while reducing operational costs.

In a further demonstration of its ambition, Qualcomm announced a partnership with Humain AI of Saudi Arabia, which plans to deploy 200 megawatts of Qualcomm’s upcoming systems upon their availability. This collaboration underscores Qualcomm’s commitment to global expansion and reflects the Middle East’s growing role in AI infrastructure investment.

Wall Street analysts have characterized Qualcomm’s unexpected push into AI as a potential disruptor in the market. Reports from Barron’s indicate that this move is perceived as a direct challenge to Nvidia’s market dominance and AMD’s efforts to carve out a larger share of the AI space. Following the announcement, Nvidia’s stock experienced a slight decline as market participants assessed the competitive landscape, while AMD also faced minor losses amid renewed concerns regarding market share.

Market analysts note that Qualcomm’s foray into data centre chips could exert pricing pressure on its competitors, intensifying competition throughout the AI supply chain. This announcement builds on Qualcomm’s earlier acquisition of Alphawave IP Group, a deal valued at $2.4 billion, which enhanced its data centre connectivity and infrastructure capabilities.

By merging its expertise in mobile chip efficiency with new server-grade AI technology, Qualcomm aims to capture a substantial portion of the global AI data centre market, projected to reach hundreds of billions of dollars by 2030. The company has set an ambitious long-term goal of generating up to $22 billion in annual revenue from its AI, automotive, and Internet-of-Things divisions by 2029, reducing its reliance on smartphone sales that have faced cyclical downturns in recent years.

Experts regard this strategic pivot as one of Qualcomm’s most significant moves in decades. Although the AI200 and AI250 are not expected to generate revenue until the latter half of the decade, the announcement reaffirms Qualcomm’s commitment to competing at the forefront of AI hardware design. For investors, this shift signifies a pivotal moment in Qualcomm’s evolution from a mobile processor leader to a key player in the burgeoning field of AI computing. The surge in Qualcomm’s shares indicates that Wall Street recognizes the potential for the company to thrive in the data centres driving the next generation of intelligent systems.