Key Highlights
- Shares of QCOM climbed 5.3% during early market hours following a premarket spike exceeding 10%
- The semiconductor company elevated its fiscal 2029 non-handset revenue forecast to $40 billion, representing nearly twice its prior projection
- Meta Platforms will integrate Qualcomm’s Dragonfly C1000 processors starting in 2028; Microsoft’s Azure cloud service will deploy its HBC chip design beginning mid-2027
- The company unveiled a $3.9 billion purchase of AI software firm Modular
- Wall Street price objectives varied from $190 (Susquehanna) to $300 (Benchmark), featuring diverse analyst opinions
Shares of Qualcomm experienced a significant rally on Thursday following the semiconductor manufacturer’s disclosure of two major data-center partnerships with Meta Platforms and Microsoft, accompanied by a substantial increase in long-term revenue projections.
QCOM shares advanced 5.3% during Thursday’s early trading session, after experiencing a surge surpassing 10% before the opening bell. The equity had already gained approximately 12% in after-hours trading Tuesday evening, following the company’s Investor Day event.
During the presentation, Qualcomm disclosed that Meta Platforms would incorporate its Dragonfly C1000 central processing units upon their 2028 debut. Additionally, Microsoft’s Azure cloud computing platform will implement Qualcomm’s High Bandwidth Compute (HBC) processor architecture, scheduled for rollout in mid-2027.
Qualcomm Chief Financial Officer Akash Palkhiwala explained to Barron’s that the HBC processor integrates logic and memory elements to provide superior performance and bandwidth capabilities while maintaining energy efficiency.
According to the company, both hyperscale custom chip agreements are projected to each generate over $1 billion in revenue by fiscal year 2027.
The chipmaker also increased its fiscal 2029 non-handset revenue projection to $40 billion, compared to the previous estimate of $22 billion. Specifically, data-center revenue is anticipated to reach $15 billion by that timeframe.
Strategic Transformation Beyond Mobile Devices
Mobile handsets currently represent 72% of Qualcomm’s fiscal 2025 revenue stream. However, the company projects this proportion will decline to merely one-third by fiscal 2029 as it expands aggressively into data center operations and artificial intelligence markets.
“Although we’re entering this market later than others, we’re bringing technological advantages and unique solutions that address the challenges these enterprises face,” Palkhiwala stated.
To accelerate this strategic transformation, Qualcomm disclosed a $3.9 billion acquisition agreement for Modular, a company specializing in AI infrastructure software. Modular has developed an AI programming language designed to compete with Nvidia’s dominant CUDA platform.
“Our comprehensive strategy centers on establishing an industry-standard software stack that remains completely open source and deployable by any client, whether on Qualcomm processors or competing hardware,” Palkhiwala explained.
Qualcomm additionally announced an enhanced collaboration with Hugging Face aimed at accelerating AI advancement throughout data center and AI storage infrastructure ecosystems.
Wall Street Perspectives
Benchmark elevated its price objective to $300 from $225, representing the most bullish target among analysts, while maintaining its Buy recommendation. The investment firm noted that Qualcomm had effectively redirected investor attention away from handset market volatility toward edge-to-cloud AI infrastructure opportunities.
Morgan Stanley upgraded QCOM from Underweight to Equalweight, increasing its price target to $231, referencing robust fiscal 2027 data-center revenue projections.
Susquehanna increased its target to $190 from $160 while maintaining a Neutral stance, highlighting “challenges within the smartphone sector.”
Bank of America elevated its target to $220 from $195 while retaining an Underperform rating. The firm recognized the improved guidance but contended the valuation “already reflects substantial data center expectations” and identified risks surrounding unproven custom chip production scaling.
Cantor Fitzgerald similarly increased its target to $220, maintaining a Neutral position.
KeyBanc analyst John Vinh maintained a Sector Weight rating, noting “we’re in the early stages” despite projections exceeding market expectations.
Bank of America also identified potential Apple QTL contract renewal uncertainty as a possible high-margin risk factor.
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