How Qualcomm Plans to Build a $5 Billion Data-Center Business

Qualcomm wants to turn its chip-design experience into a broader data-center business as it reduces reliance on smartphone sales. The company’s reported target is about $5 billion in data-center revenue, up from a roughly $300 million baseline, but reporting differs on whether that target is for fiscal 2027 or fiscal 2028. Its separate goal of capturing 5% of an estimated $1 trillion market would amount to $50 billion in annual sales if the market estimate and share ambition are realized—not a current forecast. 18

A broader set of chips for data centers

Qualcomm describes its approach as spanning custom silicon, CPUs, AI accelerators and connectivity. These components address different parts of data-center computing: a customer-specific chip can be designed for a particular workload, CPUs handle general computing tasks, and AI accelerators are built for AI workloads. Qualcomm has also highlighted High Bandwidth Compute technology as a way to address memory-bandwidth limits in AI inference. 3

Connectivity is part of the pitch, too. Moving data between processors and systems is essential to operating a data center, and Qualcomm’s Amazon collaboration covers custom silicon as well as optical connectivity products. That broader package gives Qualcomm a way to pursue more than a standalone chip sale, although the available sources do not establish how much revenue each part of the offering will contribute. 6

Qualcomm is also positioning its designs around power efficiency. That is a company pitch rather than proof of a specific efficiency advantage: the provided sources do not offer comparative performance or power-consumption results for its planned data-center products. 11

What the Amazon collaboration adds

Amazon gives Qualcomm a named cloud customer for its data-center push. The multi-generation collaboration covers server-chip products and related technology, with revenue from the work expected to begin in the December quarter. 6

The agreement includes a warrant for an Amazon affiliate to buy up to 25 million Qualcomm shares at $161.26 each. The warrant’s vesting is tied to purchases that can reach $60 billion over ten years. That figure is a threshold associated with the warrant—not a guarantee that Amazon will place $60 billion in orders or that Qualcomm will recognize that amount as revenue. If exercised, the warrant could also dilute existing shareholders.

The $5 billion target has a fiscal-year discrepancy

The fiscal year attached to the $5 billion goal is not consistent across the reports. Reuters and Qualcomm’s fiscal 2026 earnings-call transcript identify the target as fiscal 2027; a CNBC-TV18 report describes the “next year” target as fiscal 2028. The clearest company-call reporting points to fiscal 2027, but readers should note the discrepancy rather than treat the fiscal-year label as settled across all coverage. 18

The longer-range goals are separate from the 5% market-share ambition. Qualcomm has stated a target of more than $15 billion in data-center revenue by fiscal 2029. By contrast, 5% of a $1 trillion estimated market works out to $50 billion—a scale aspiration, not the fiscal-2029 target. 138

Automotive growth helps diversify the business

Data centers are not Qualcomm’s only route beyond smartphones. Automotive revenue reached $1.588 billion in fiscal Q3 2026, up 61% from a year earlier. The company’s fiscal-2029 target is more than $24 billion in combined automotive and IoT revenue; that figure is not an automotive-only forecast. 17

This growth can broaden Qualcomm’s revenue base while its data-center business ramps, but it does not guarantee that one business will offset weakness in another. The company’s results will depend on execution across several markets and product lines. 17

Apple chip sales and licensing are different exposures

Qualcomm faces declining product sales tied to Apple as Apple shifts toward using more of its own chips. Those product sales should be distinguished from Qualcomm’s separate patent-licensing business, which is reported as a separate revenue stream. The available sources do not quantify how Apple’s changing chip purchases affect Qualcomm’s licensing royalties, so a decline in chip sales should not be presented as an equal decline in royalties. 21

The test: growth, customer demand and margins

The data-center strategy still has to prove that early customer work can become sustained revenue. Qualcomm’s fiscal Q3 2026 filing reported $9.9 billion in total revenue and a decline in gross-margin percentage, primarily because of lower margins in its chip business. On its earnings call, the company also indicated that initial custom-chip revenue could carry lower margins than its baseline, creating a possible trade-off: faster sales growth may weigh on margins during the ramp.

The key indicators to watch are whether data-center shipments start on schedule, whether customer purchases expand beyond initial programs, and whether Qualcomm can grow the business without a lasting hit to margins. Those execution questions matter more than the headline market-share ambition.