Qualcomm Shares Surge 20% on AI Chip Launch and Strong Earnings

Qualcomm experienced a remarkable surge in share price on Monday, with stocks jumping by as much as 20% before closing 11% higher. This significant increase followed the company’s announcement of its entry into the data centre market with a new line of artificial intelligence (AI) chips and rack-scale servers. The announcement sent shockwaves through Silicon Valley, intensifying competition with established players such as Nvidia and AMD.

The US semiconductor giant revealed plans for its AI200 and AI250 platforms, which are designed to accelerate AI workloads for enterprise and cloud customers. The AI200 will include a built-in Qualcomm CPU and is set to debut in 2026. Following that, the more advanced AI250 is scheduled for release in 2027, with a third next-generation model expected by 2028. This strategic move marks Qualcomm’s first direct foray into the high-margin data centre segment, which has long been dominated by competitors like Nvidia.

Alongside the product launch, Qualcomm reported quarterly revenue of $10.37 billion (£7.76 billion) and adjusted earnings per share of $2.77 (£1.70), exceeding Wall Street’s expectations. According to Yahoo Finance, the combined impact of the earnings beat and the AI product launch contributed to the impressive rise in Qualcomm’s share price. Analysts noted that investors are encouraged by Qualcomm’s growing diversification beyond its traditional smartphone market.

Qualcomm’s new AI product line positions the company in direct competition with Nvidia’s well-established AI accelerator business and AMD’s efforts to expand its market share. Both rivals have benefited from the soaring global demand for high-performance computing chips, driven by the ongoing transformation of data infrastructure due to AI advancements.

The AI200 and AI250 chips will focus on inference processing, where trained AI models are executed, rather than developed. Analysts point out that this area is less saturated and experiencing faster growth than the training market, which Nvidia currently dominates. Qualcomm claims its new systems will offer energy-efficient and cost-effective performance, assisting data centre operators in managing increasingly complex AI workloads while reducing expenses.

A key aspect of Qualcomm’s announcement is a strategic partnership with Humain AI of Saudi Arabia, which plans to implement 200 megawatts of Qualcomm’s upcoming systems once they become available. This collaboration underscores Qualcomm’s ambitions on a global scale and highlights the Middle East’s emerging role in AI infrastructure investment.

The market response has been closely monitored, with Wall Street analysts describing Qualcomm’s AI initiative as a potential disruptor. Barron’s reported that the move is seen as a direct challenge to Nvidia’s dominance in AI accelerators and AMD’s attempts to expand in the sector. As traders assessed the competitive threat, Nvidia’s stock experienced a slight decline, with AMD also facing minor setbacks amid renewed concerns about market share.

Industry observers suggest that Qualcomm’s entry into the data centre chip market could exert pricing pressure on both Nvidia and AMD as competition intensifies across the AI supply chain. This launch builds on Qualcomm’s earlier acquisition of UK-based Alphawave IP Group for $2.4 billion (£1.79 billion), which enhanced its data centre connectivity and infrastructure capabilities.

By combining its mobile chip efficiency expertise with new server-grade AI technology, Qualcomm aims to capture a significant share of the global AI data centre market, which is projected to reach hundreds of billions of dollars by 2030. The company has set an ambitious long-term target of generating up to $22 billion (£16.47 billion) in annual revenue from its AI, automotive, and Internet-of-Things divisions by 2029. Analysts believe this shift could help reduce Qualcomm’s reliance on smartphone sales, which have faced cyclical downturns in recent years.

Qualcomm’s announcement signals one of the most significant strategic pivots in decades. Although the AI200 and AI250 will not generate revenue until the middle of the decade, the announcement reaffirms the company’s commitment to competing at the highest levels of AI hardware design. For investors, this strategy represents a defining moment, as Qualcomm, historically recognized for its dominance in mobile processors, repositions itself at the forefront of the global AI computing boom. The recent surge in share prices suggests that Wall Street anticipates a new chapter for Qualcomm, one that may unfold not in smartphones but within the data centres driving the next generation of intelligent systems.