Qualcomm and cloud provider AWS have announced a multi-year partnership for custom AI chips and optical data center networking. In return, Amazon receives warrants for up to 25 million Qualcomm shares, the full exercise of which is tied to purchases of up to $60 billion by the year 2036. This secures Qualcomm one of the largest contracts to date from a Western cloud operator for its still young data center business.
Chips and optical networking complement the portfolio
At the center of the cooperation are custom accelerators for AI inference – that is, executing already trained models in real-time. Additionally, optical connections with up to 1.6 terabits per second will be used for networking the AWS data centers. Qualcomm brings its experience with signal processors and high-speed interfaces from the mobile business to this. The announcement from Qualcomm describes the collaboration as multi-generational. It aims to increase the efficiency and performance of future AI infrastructure.
Qualcomm CEO Cristiano Amon stated that the growing demand for AI requires advancements in both computing power and networking to deliver more performance with higher efficiency. AWS Vice President Prasad Kalyanaraman announced that the partnership will provide more powerful, efficient, and cost-effective infrastructure for AWS customers. The cooperation complements Qualcomm’s previously announced accelerator series Dragonfly AI300 from June, as well as a separate agreement with Meta regarding the Dragonfly processor line C1000.
The business relationship between the two companies is not entirely new: AWS has been offering cloud instances based on Qualcomm’s older Cloud AI 100 chips since 2023. The new agreement elevates the collaboration from individual instance types to a multi-year, jointly developed chip and network architecture.
Warrants tie bonus to billion-dollar purchases
As part of the agreement, Amazon receives warrants for up to 25 million Qualcomm shares at an exercise price of $161.26, which will run until the year 2036. An initial tranche of 3.75 million shares is already tied to initial purchase commitments, while the remaining warrants will vest gradually with the actual purchase volume. Full exercise requires Amazon purchases of server chips, networking technology, and other Qualcomm services amounting to up to $60 billion. Several business media outlets cite this figure based on stock exchange documents, while Qualcomm itself does not specify it in its own announcement – the figure is therefore considered independently unverified. It is not a firm purchase guarantee, but rather an incentive model tied to milestones.
The warrants vest in stages as certain contractual milestones are reached – such as the formal completion of individual supply agreements and actual purchases made. The structure resembles other billion-dollar computing power deals in the industry: Amazon itself recently raised its AI investment forecast to $220 billion, as AWS demand exceeds available capacity. For Qualcomm, this model provides a financial incentive to actually convert the order into revenue, rather than relying solely on an announcement.
Stock market reacts with significant price jump
Qualcomm’s stock rose significantly on the day of the announcement, according to several reports. The exact figures vary between around four and ten percent, depending on the measurement point between pre-market trading and market close. The analysis firm Rosenblatt Securities subsequently confirmed its buy rating with a price target of $235. Several market observers viewed the AWS contract as one of the most significant pieces of evidence to date that Qualcomm can establish itself in the AI data center business alongside the long-dominant provider Nvidia.
The move fits into a broader trend: AI inference is increasingly no longer reliant solely on Nvidia graphics chips. The Chinese lab DeepSeek is also developing its own inference chip to reduce costs and dependencies. Unlike DeepSeek, Qualcomm is not building for in-house use, but is positioning itself as an external supplier for hyperscalers like AWS.
It remains to be seen how Qualcomm’s chips will relate to AWS’s own processor lines Trainium and Graviton, which Amazon has been developing in parallel for training and general computing loads for years. Neither Qualcomm nor AWS has provided a specific availability date for the first joint chips. The next milestone is likely to be the first actually delivered chip generation – only then will it become clear whether real orders will emerge from the announcement.
