Qualcomm lands Amazon AI chip deal worth up to $60 billion

Qualcomm's Amazon partnership arrives as the company navigates the eventual loss of Apple's modem business and weaker handset demand. The agreement gives Qualcomm a major cloud customer alongside Microsoft and Meta, which are already working with it on custom AI chips. Amazon is not new to custom silicon either; its annualized custom-chip revenue run-rate exceeded $25 billion at the end of the June quarter. The deal also extends into optical connectivity, addressing the data-center bandwidth requirements that accompany AI workloads.

For Amazon, the tie-up could strengthen AWS's ability to offer a broader and potentially more cost-efficient mix of AI infrastructure, reducing reliance on any single chip supplier. Qualcomm's focus on inference is relevant because inference demand is expected to grow as AI models become more widely deployed.

The stakes hinge on Qualcomm's execution. The $60 billion represents a potential purchase commitment, not guaranteed revenue, and Qualcomm must still commercialize chips that can compete with Nvidia and other established suppliers. Its $15 billion 2029 data-center revenue target now carries higher expectations, and the warrants create potential shareholder dilution if exercised. For Qualcomm investors, the test is whether the Amazon relationship translates into the growth they anticipate.