Qualcomm targets $15B data center revenue by 2029 with AI chips

Qualcomm is making a decisive push into the AI data center market, unveiling plans to generate $15 billion in data center revenue by fiscal year 2029 as it transitions from its smartphone roots to enterprise infrastructure.

CFO and COO Akash Palkhiwala told Yahoo Finance that the company has entered the data center business with a full rack-scale infrastructure approach, marking a fundamental shift in how Qualcomm delivers products to customers. The company is now shipping complete server racks equipped with its AI accelerator chips, a departure from its traditional component-focused business model.

Four-pillar data center strategy

Qualcomm's data center ambitions rest on four distinct product lines: custom chips, connectivity solutions, CPUs, and AI accelerators. The company is targeting $5 billion in data center revenue for fiscal 2027, which begins in three months, before scaling to $15 billion two years later.

The chipmaker has already secured two unnamed hyperscale customers for custom ASIC development, with each relationship expected to generate more than $1 billion in revenue during fiscal 2027. These custom silicon engagements will appear as a new line item in Qualcomm's financial reporting.

Meta and Microsoft partnerships

Qualcomm has disclosed partnerships with two major technology companies. Meta is working with Qualcomm on the CPU side, with the chipmaker building products based on Meta's specifications. Qualcomm is bringing its 5 GHz CPU—which Palkhiwala described as an industry leader—from mobile devices into the data center environment.

Microsoft is collaborating on a new architecture Qualcomm calls HPC (high bandwidth compute), which packages compute resources alongside memory to deliver what the company claims is superior performance per watt and high memory bandwidth. Palkhiwala characterized Microsoft's response to the technology as "very positive."

Why it matters

Qualcomm's data center expansion represents a strategic hedge against smartphone market saturation and positions the company to compete directly with Nvidia and AMD in the lucrative AI infrastructure market. The $15 billion revenue target would represent a meaningful portion of Qualcomm's business—the company reported $38.96 billion in total revenue for fiscal 2024. Success in custom silicon for hyperscalers could provide high-margin, long-term revenue streams that are less cyclical than consumer electronics. However, Qualcomm faces entrenched competition from established data center chip vendors and must prove its mobile-optimized architectures can scale to meet enterprise AI workloads.

The details were first reported by Yahoo Finance in a video interview with Palkhiwala.