Key Takeaways
- Shares of QCOM climbed 5.3% during morning trading following a premarket spike exceeding 10%
- The semiconductor manufacturer increased its fiscal 2029 non-smartphone revenue projection to $40 billion, approximately double its earlier forecast
- Meta Platforms plans to deploy Qualcomm’s Dragonfly C1000 processors starting in 2028; Microsoft Azure will implement its HBC chip design beginning mid-2027
- The company unveiled plans to acquire AI software firm Modular for $3.9 billion
- Wall Street analysts set price targets between $190 (Susquehanna) and $300 (Benchmark), offering varying outlooks
Shares of Qualcomm experienced significant gains Thursday after the semiconductor company disclosed the identities of two major data-center partners — Meta Platforms and Microsoft — while substantially increasing its long-range revenue projections.
QCOM shares advanced 5.3% during Thursday morning trading, following a premarket rally that exceeded 10%. The stock had already gained approximately 12% in after-hours activity Tuesday after Qualcomm’s Investor Day presentation.
During that investor event, Qualcomm disclosed that Meta will integrate its Dragonfly C1000 central processing units upon their 2028 release. Additionally, Microsoft’s Azure cloud platform will incorporate Qualcomm’s High Bandwidth Compute (HBC) chip design, anticipated to become available in mid-2027.
Qualcomm Chief Financial Officer Akash Palkhiwala explained to Barron’s that the HBC processor merges logic and memory elements to provide exceptional performance and bandwidth while maintaining low power consumption.
The semiconductor firm indicated that each hyperscale custom-silicon partnership should generate over $1 billion in revenue by fiscal year 2027.
Qualcomm elevated its fiscal 2029 non-smartphone revenue objective to $40 billion, significantly higher than the previous $22 billion projection. Revenue from data-center operations alone is projected to reach $15 billion during that timeframe.
Strategic Shift Beyond Mobile Devices
Mobile handsets currently represent 72% of Qualcomm’s fiscal 2025 revenue. The company anticipates this proportion will decline to merely one-third by fiscal 2029 as it expands deeper into data centers and artificial intelligence markets.
“While we’re coming in late, we’re coming in with technology advantages and something unique that solves the problems that these companies have,” Palkhiwala said.
Supporting this strategic transformation, Qualcomm revealed 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.
“The entire strategy here is to have an industry standard stack that is completely open source that can be deployed by any customers, on Qualcomm chips, but also on competitive chips,” Palkhiwala said.
Qualcomm additionally announced an enhanced collaboration with Hugging Face to accelerate AI advancement across data center and AI storage infrastructure.
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 firm noted Qualcomm had successfully redirected investor attention away from handset-cycle concerns toward edge-to-cloud AI infrastructure opportunities.
Morgan Stanley upgraded QCOM from Underweight to Equalweight, increasing its target to $231, citing robust fiscal 2027 data-center revenue projections.
Susquehanna increased its target to $190 from $160 while maintaining a Neutral stance, highlighting “headwinds in the mobile market.”
Bank of America raised its objective to $220 from $195 but retained an Underperform rating. BofA recognized the improved guidance but contended the stock “already embeds meaningful data center success” and identified concerns regarding unproven custom silicon production ramps.
Cantor Fitzgerald similarly increased its target to $220, maintaining a Neutral rating.
KeyBanc analyst John Vinh remained at Sector Weight, stating “it’s early days” despite projections surpassing expectations.
BofA additionally highlighted an Apple QTL renewal risk as a potential high-margin concern.
