Why Qualcomm is outperforming the rest of the market today?

Qualcomm (NASDAQ: QCOM) is one of Tuesday’s biggest movers, climbing 4% even as most of Wall Street headed lower. The jump came after the chipmaker announced a major data center partnership with Amazon (NASDAQ: AMZN) Web Services.

Qualcomm told the Securities and Exchange Commission that Amazon received warrants covering 25 million Qualcomm shares. Amazon can purchase those shares at $161.26 each, bringing the total value to about $4 billion if all of the warrants are used.

The warrants expire on September 3, 2036, and Amazon gets access to them in separate stages as certain business requirements are completed.

Qualcomm links Amazon’s warrants to as much as $60 billion in chip orders

One of those requirements could turn into a massive amount of business. Qualcomm said Amazon can receive parts of the warrants through the “execution of certain commercial arrangements” and by purchasing as much as $60 billion of Qualcomm server chips and other products. So alongside the equity piece, Qualcomm could also end up receiving tens of billions of dollars in hardware orders over the coming years.

The two companies are also planning to work together across several generations of chips. Qualcomm said they will collaborate “across multiple generations of customized silicon” for Amazon’s AI systems.

Qualcomm described the workload pressure this way: “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.”

For years, Qualcomm was mostly known for the processors inside smartphones and other mobile gadgets. That part of the business still matters, but the company has been moving deeper into data center hardware.

That shift became much more obvious in June when Qualcomm introduced the Dragonfly C1000, a CPU made for data centers. Meta Platforms (NASDAQ: META) plans to use the chip once full production begins in 2028.

The company is targeting $15 billion in data center sales during fiscal 2029. Its server plans go beyond CPUs as well. Qualcomm is also working on dedicated AI chips and another product that will connect several processors and allow them to operate together.

Amazon now joins the list of hyperscale customers evaluating Qualcomm hardware. Amazon and Meta are both spending hundreds of billions of dollars each year on AI infrastructure and other large capital projects.

AI server spending pushes CPUs deeper into the chip battle

Nvidia is still the biggest player in AI hardware and has become the world’s most valuable public company largely because of its control of the GPU market. GPUs are heavily used for training advanced models and running very demanding AI workloads because they contain thousands of smaller cores that can process many calculations at the same time.

CPUs usually contain less powerful cores but which are more effective in performing sequential general computing tasks. AI requires the use of both CPUs and GPUs, but the increasing development of software agents is redirecting more focus on CPUs.

Bank of America (NYSE: BAC) expects the CPU market to rise from $27 billion in 2025 to $60 billion by 2030, which would more than double the size of the industry within five years.

Intel (NASDAQ: INTC) and Advanced Micro Devices (NASDAQ: AMD) are already seeing higher demand for data center CPUs. Nvidia is also pushing further into that part of the market. The company shared more details in March about CPUs created specifically for agentic AI workloads.

The Dow Jones Industrial Average fell 574 points, or 1.1%. The S&P 500 dropped 0.4%, while the Nasdaq Composite declined 0.3%.

Investors were also dealing with another rise in oil prices after clashes between the United States and Iran over the weekend. West Texas Intermediate crude moved higher for a sixth straight session. That was its longest stretch of gains since a seven-day run back in March.

Brent crude was trading close to $98 per barrel.

Higher energy prices have added another source of inflation pressure right before two important U.S. reports. The August producer price index is due Thursday, while the consumer price index is scheduled for Friday.

Those reports come just before the Federal Reserve’s September 15-16 meeting. Futures monitored by CME Group (NASDAQ: CME) were showing a 58% chance that the Fed will raise its benchmark interest rate by 25 basis points.

Meanwhile, the 10-year U.S. Treasury yield recently reached its highest level since November 2023, while the 2-year yield rose to its highest point since January 2025.

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