Qualcomm shares jumped more than 5% on Tuesday after news the market had been waiting on for a while: the company will supply custom chips to Amazon Web Services. This isn't about the phone processors Qualcomm has built for decades — it's data center silicon, the market Nvidia currently dominates.
The deal's structure is unusual. Instead of a flat contract value, Amazon received a warrant for 25 million Qualcomm shares at $161.26 each — worth roughly $4 billion at current prices. Of that, 3.75 million shares vested immediately, tied to purchase commitments Amazon has already made. The rest unlocks gradually as AWS actually spends money on Qualcomm's chips, networking gear and manufacturing services — up to $60 billion in total purchases through 2036.
Technically, the two companies are focused on inference — the part of AI computing where an already-trained model answers user queries, as opposed to training a model from scratch. That workload is cheaper to run and doesn't need Nvidia's top-tier GPUs, but it does demand efficient chips and fast links between servers. Qualcomm and AWS are jointly building 1.6-terabit-per-second optical interconnects for their server racks.
For Qualcomm, this is its second major hyperscaler win after a deal with Meta announced earlier this year — and the first of this scale with one of the biggest US cloud providers. The company formally entered the data center market in June 2026 with its Dragonfly C1000 processor and is targeting $15 billion in data center revenue by fiscal 2029. Amazon's motive is more pragmatic: CEO Andy Jassy has said revenue from the company's own chip lines — Trainium, Graviton and Nitro — already runs around $20 billion a year, and partnering with Qualcomm widens that portfolio without leaving AWS fully dependent on a single accelerator supplier.
What's really at stake here goes beyond one contract. Every major cloud player — Amazon, Google, Microsoft — has spent years trying to reduce its reliance on Nvidia, which controls most of the AI chip market and prices accordingly. The Qualcomm deal is another step in that direction for AWS, and for Qualcomm, a chance to prove its business beyond smartphones can actually scale.
