Qualcomm’s AWS AI chip deal gets its numbers: $4 billion in warrants and a $15 billion target

Qualcomm's plan to sell AI silicon to Amazon has acquired the two things investor stories need most: dates and digits. Shares in the chipmaker climbed to a two-month high as details of its multi-generational AI data-centre deal with Amazon emerged, and the numbers are substantial. Qualcomm expects roughly $5 billion of data-centre revenue in FY2027, rising past $15 billion by FY2029, with the Amazon relationship due to start contributing in the December 2026 quarter. Amazon, for its part, holds warrants over up to 25 million Qualcomm shares at an exercise price of $161.26, worth about $4.03 billion if fully exercised, with vesting tied to commercial milestones and Amazon's actual purchases. That is equity upside deployed as customer loyalty, at a scale that gets attention.

Watch Desk analysis

What happened

Qualcomm and Amazon have announced a multi-generational collaboration focused on AI data-centre infrastructure. AWS is expected to use Qualcomm's customised AI chips for inference workloads, while Qualcomm supplies high-speed optical connectivity for data centres. The signing itself was reported earlier this month; the fresh material is the economics, laid out in a report carried by The Economic Times drawing on GuruFocus and TradingView coverage.

The context gives the targets their urgency. Qualcomm's handset revenue fell 20% year on year to $5.09 billion in fiscal Q3, which is exactly why the company has been pushing hard into automotive, IoT and AI infrastructure. Management now targets $40 billion of total non-handset revenue by FY2029 and frames the broader commercial opportunity at up to $60 billion over ten years.

Analysts have started marking up the story. StoneX's Cody Acree keeps a Buy rating with a $270 price target, and RBC lifted its target to $180 from $160.

The numbers

• Warrants as alignment
  Amazon can acquire up to 25 million shares at $161.26, about $4.03 billion of potential value, vesting against milestones and purchases.
• A start date, not a vibe
  Qualcomm expects revenue from the Amazon relationship to begin in the December 2026 quarter.
• The ramp
  Around $5 billion of data-centre revenue in FY2027, targeted to pass $15 billion by FY2029.
• The wider diversification
  $40 billion of total non-handset revenue by FY2029, spanning automotive, IoT and AI infrastructure.
• The scoreboard
  StoneX holds a $270 target on a Buy rating; RBC moved to $180 from $160.

Why it matters

Hyperscalers have spent years hunting for alternatives to the dominant accelerator suppliers, and a multi-generational commitment hands Qualcomm something better than one order: a standing place on AWS's roadmap. If custom Qualcomm silicon genuinely runs inference at scale, inference buyers get a second price point and pricing pressure lands on everyone's margins.

The warrant structure is the most interesting clause in the contract. Tying roughly $4 billion of equity upside to milestones and purchases aligns supplier and customer more tightly than any purchase order, and it also hands the customer unusual leverage over the supplier. Amazon profits twice if the chips are cheap and plentiful; Qualcomm's shareholders absorb the dilution if they are not.

Our read

Treat the targets as intentions rather than deliveries. A $15 billion data-centre business by FY2029 would be a remarkable turn for a company whose phone chip revenue just fell by a fifth, and Qualcomm has every incentive to draw the destination sunnier than the road. What makes this more than slide-ware is the December 2026 quarter: the revenue either appears or the timetable slips, and that will be visible in ordinary earnings.

The practical move depends on who you are. If you buy AI capacity, watch for a credible second source and price accordingly. If you invest in the sector, the tell is deployment: AWS naming Qualcomm inference silicon in a running service beats any press release.

What to watch

• The December 2026 quarter.
  First Amazon-related revenue either lands or the timeline moves.
• Milestone vesting.
  Which commercial milestones trigger the warrants, and how much Amazon actually buys.
• A named deployment.
  AWS service documentation running Qualcomm inference silicon in production.
• The FY2027 checkpoint.
  Whether data-centre revenue lands anywhere near the $5 billion mark.

Discussion spark: Do warrants worth about $4.03 billion, vesting against Amazon's purchases, make Qualcomm a genuine second source for AI inference, or simply hand AWS leverage to squeeze its supplier on price?

Watch Desk is operated by WittyWires as an independent cross-cutting AI news tracker. It does not speak for the organisations or people it covers.