Qualcomm issues Amazon warrants to buy $4 billion worth of chipmaker’s stock as part of AI infrastructure deal
Qualcomm issues Amazon warrants to buy $4 billion worth of chipmaker's stock as part of AI infrastructure deal. In this articleQCOMAMZNFollow your favorite stocksCREATE FREE ACCOUNTwatch nowVIDEO4:0804:08Qualcomm to build chips for AmazonSquawk on the StreetQualcomm shares rose 3% on Tuesday after the company announced a data center infrastructure partnership with Amazon Web Services, a major win as the chipmaker tries to take on Nvidia in the artificial intelligence market.
What happened
As part of the agreement, Qualcomm said in a filing with the Securities and Exchange Commission that it issued warrants to Amazon to acquire 25 million shares in the company at $161. WATCH: Qualcomm partners with AWSwatch nowVIDEO1:5801:58Qualcomm partners with Amazon to build next-gen AI data center infrastructureSquawk on the StreetChoose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news. Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuKey PointsQualcomm said it's working with Amazon across "multiple generations of customized silicon" to help build out AWS' AI infrastructure.
Qualcomm issued warrants to Amazon to acquire 25 million shares. According to a press release about the technology pact, Qualcomm is working with Amazon "across multiple generations of customized silicon" to help build out AWS' AI infrastructure, specifically focused on inference. "As AI workloads grow exponentially — driving unprecedented demand for compute, storage, networking and memory bandwidth, and energy-efficient infrastructure — the collaboration brings together Amazon's comprehensive, secure, and price-performant AI infrastructure with Qualcomm Technologies' leadership in power-efficient processing, silicon design and system-level integration," the statement said.
Like Meta, Amazon's annual capital expenditures on AI infrastructure are reaching into the hundreds of billions of dollars.
The wider picture
The company said the shares vest in tranches tied to the "execution of certain commercial arrangements," as well as the purchase of up to $60 billion worth of Qualcomm's server chips and other technology. Qualcomm said at the time that it's targeting $15 billion in data center sales in fiscal 2029, and pointed to a road map for going after the market with several different products, including an AI chip and a product that will tie multiple chips together.
Qualcomm shares have missed out on the chip sector’s rally this year — but the company is now working on various chip projects with Amazon. Qualcomm is trying to move into the data center business, where Nvidia has been the dominant player in the AI boom. 26 apiece for a total investment of $4 billion. Qualcomm is known for making processors that power smartphones and other mobile devices. The chipmaker said the new CPU was built for agentic AI and focuses on offering computing performance without using too much power.
But more chipmakers are getting involved in the AI boom now that the CPU is proving key for AI.
What has been reported
While GPUs are ideal for training and running AI models because they have thousands of tiny cores narrowly focused on performing many operations simultaneously, CPUs have a smaller number of powerful cores running sequential general purpose tasks. Bank of America predicts the CPU market could more than double, from $27 billion in 2025 to $60 billion by 2030. Dion Harris, Nvidia's head of AI infrastructure, told CNBC at the time that, "CPUs are becoming the bottleneck in terms of growing out this AI and agentic workflow.
But the company made a big splash in June, when it revealed a central processing unit for data centers called Dragonfly C1000, and said that Meta would use it when it starts production in 2028. Nvidia has emerged as the world's most valuable company by dominating the market for graphics processing units, or GPUs, which are needed for building sophisticated AI models and running the heftiest workloads. Intel and Advanced Micro Devices are both seeing surging demand for their data center CPUs, and Nvidia in March offered new details about its agentic-optimized CPUs.
"— CNBC's Katie Tarasov contributed to this report.
The report has been compiled by The Daily Waves using information reported across cnbc.com, marketwatch.com. Details are presented according to the information available at the time of publication and may change as authorities, organisers or other relevant parties provide updates.