Key Takeaways
- The chip manufacturer boosted its fiscal 2029 non-handset revenue projection to approximately $40 billion from $22 billion
- A fresh data center revenue goal of over $15 billion by fiscal 2029 was established
- Meta Platforms committed to a multi-year agreement for Qualcomm’s Dragonfly C1000 server chip
- The company’s automotive segment generated a record $1.3 billion in Q2 FY2026, representing 38% year-over-year growth
- Shares of QCOM spiked up to 15% following the announcement before moderating
During its investor day presentation on Wednesday, Qualcomm delivered a series of aggressive announcements. The semiconductor giant almost doubled its non-handset revenue projection for fiscal 2029, elevating the target to approximately $40 billion from the previously stated $22 billion goal announced in 2024. The market responded enthusiastically, sending shares up as much as 15% during the session.
The previous $22 billion target already represented an ambitious expansion plan for an organization historically dominated by smartphone chip sales. This revised figure signals Qualcomm’s determination to significantly diversify beyond its traditional handset business.
At the heart of this strategic pivot lies the data center market. The company introduced the Dragonfly C1000, a server chip featuring over 250 custom-designed cores. Alongside this, Qualcomm revealed a series of AI accelerators specifically engineered for inference workloads rather than model training. Leadership has established a goal of exceeding $15 billion in data center-related revenue by fiscal 2029, starting from negligible current levels.
To provide perspective, the company generated $10.6 billion in total revenue during fiscal Q2 2026. Smartphone-related chips contributed roughly $6 billion to that figure. By comparison, data center revenue remains virtually non-existent at present.
The most significant revelation from the event wasn’t technical specifications — it was customer validation. Meta Platforms agreed to a multi-year, multi-generation contract to deploy Qualcomm’s new processor across its data center infrastructure, with manufacturing scheduled to commence in the second half of 2028. Securing Meta as an anchor customer lends substantial legitimacy to the data center initiative.
Meta Partnership Validates Data Center Strategy
Qualcomm’s innovative High Bandwidth Compute (HBC) architecture employs vertical chip stacking rather than traditional horizontal layouts, positioning memory and processing units in closer proximity. According to the company, this design enhances data flow and power efficiency.
The initial generation of this architecture is planned for data center deployment next year, with widespread commercial availability anticipated in 2028. The semiconductor firm is also exploring opportunities with smartphone manufacturers, PC makers, and automotive companies to eventually integrate this technology into their products.
Executive Vice President Durga Malladi stated clearly: “What starts in data centers is not going to end there.”
The AI250 accelerator, built on the HBC architecture, won’t reach commercial sampling until mid-2027. Meta’s CPU manufacturing timeline doesn’t begin until late 2028. These remain future milestones rather than current revenue streams.
Automotive Segment Shows Immediate Results
While the data center narrative focuses on 2028 and beyond, the automotive division is already producing tangible results. Qualcomm reported record-breaking automotive revenue of $1.3 billion in fiscal Q2 2026, marking a 38% increase compared to the prior year. The company has set an annual automotive revenue target of $10 billion by fiscal 2029, supported by a design-win backlog estimated at approximately $65 billion.
This existing momentum provides concrete evidence supporting the broader diversification thesis. The automotive business demonstrates that the strategy can succeed in markets outside smartphones.
From a valuation perspective, the stock currently trades at roughly 17 times non-GAAP earnings. This multiple remains considerably below broader market averages and significantly lower than valuations assigned to leading AI chip manufacturers — indicating that investors continue to view Qualcomm predominantly as a mobile chip company.
QCOM finished Thursday’s trading session at $189.39, declining 7.57% as the stock retreated from Wednesday’s investor day-fueled rally.
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