Qualcomm shares jumped sharply on Thursday after the chipmaker revealed that Meta Platforms and Microsoft are major customers for its upcoming data-center processors, and it nearly doubled its long-term revenue target from non-handset businesses. The stock was up 5.3% in early trading, paring a premarket surge of over 10% following its investor day presentation.
The company announced that Meta will adopt its Dragonfly C1000 CPUs when they launch in 2028, while Microsoft's Azure cloud division will use Qualcomm's High Bandwidth Compute (HBC) chip architecture expected in mid-2027. CFO Akash Palkhiwala said each hyperscale deal is expected to generate more than $1 billion in revenue by fiscal 2027. Qualcomm also raised its fiscal 2029 non-handset revenue target to $40 billion, up from $22 billion, with $15 billion coming from data-center sales alone.
The pivot away from smartphones is dramatic: handsets now make up 72% of fiscal 2025 revenue, but by fiscal 2029 they are expected to account for only one-third. To support the shift, Qualcomm agreed to acquire AI infrastructure software company Modular for $3.9 billion in an all-stock deal. Modular's AI programming language is seen as a rival to Nvidia's CUDA, and Qualcomm aims to create an open-source, industry-standard stack that can be used on its own and competitors' chips.
Analyst reactions were mixed. Benchmark raised its price target to $300, the highest, while Morgan Stanley upgraded the stock to Equalweight. Susquehanna and Bank of America remained cautious, with BofA warning that the stock may already reflect significant data-center success and flagging an Apple QTL renewal risk. The news underscores a broader diversification for Qualcomm into AI infrastructure, a sector that has faced investor scrutiny over hyperscaler spending sustainability.
