Qualcomm partners with Amazon Web Services for data center AI infrastructure

Qualcomm shares rose 3% on Tuesday after the company announced a data center infrastructure partnership with Amazon Web Services, a major win as the chipmaker tries to take on Nvidia in the artificial intelligence market. The stock initially jumped about 10%.

According to a press release, Qualcomm is working with Amazon "across multiple generations of customized silicon" to help build out AWS' AI infrastructure, specifically focused on inference. Financial terms weren't disclosed.

"As AI workloads grow exponentially — driving unprecedented demand for compute, storage, networking and memory bandwidth, and energy-efficient infrastructure — the collaboration brings together Amazon's comprehensive, secure, and price-performant AI infrastructure with Qualcomm Technologies' leadership in power-efficient processing, silicon design and system-level integration," the statement said.

Qualcomm is known for making processors that power smartphones and other mobile devices. But the company made a big splash in June, when it revealed a central processing unit for data centers called Dragonfly C1000, and said that Meta would use it when it starts production in 2028.

The chipmaker said the new CPU was built for agentic AI and focuses on offering computing performance without using too much power. Qualcomm said at the time that it's targeting $15 billion in data center sales in fiscal 2029, and pointed to a roadmap for going after the market with several different products, including an AI chip and a product that will tie multiple chips together.

In teaming up with AWS, Qualcomm is getting a show of confidence from another hyperscaler. Like Meta, Amazon's annual capital expenditures on AI infrastructure is reaching into the hundreds of billions of dollars.

Nvidia has emerged as the world's most valuable company by dominating the market for graphics processing units (GPUs), which are needed for building sophisticated AI models and running the heftiest workloads. But more chipmakers are getting involved in the AI boom now that the CPU is proving key for AI.

While GPUs are ideal for training and running AI models because they have thousands of tiny cores narrowly focused on performing many operations simultaneously, CPUs have a smaller number of powerful cores running sequential general-purpose tasks.

Bank of America predicts the CPU market could more than double, from $27 billion in 2025 to $60 billion by 2030. Intel and Advanced Micro Devices are both seeing surging demand for their data center CPUs, and Nvidia in March offered new details about its agentic-optimized CPUs.

Dion Harris, Nvidia's head of AI infrastructure, told CNBC at the time that, "CPUs are becoming the bottleneck in terms of growing out this AI and agentic workflow."