Qualcomm Teams Up With Amazon on Multi-Generation AI Chips, Surges Over 10% Pre-Market

TradingKey - In U.S. pre-market trading on Tuesday, Qualcomm (QCOM) shares surged rapidly, gaining over 10% at one point. The company and Amazon (AMZN) announced a multi-generational product partnership to jointly develop custom chips for next-generation large-scale artificial intelligence data centers and further expand high-speed optical interconnect solutions.

Source: TradingView

According to the partnership details announced by both parties, the two companies will focus on advancing multi-generational product development for custom AI inference chips to meet AWS's growing AI infrastructure demands. Meanwhile, both sides also plan to jointly develop optical interconnect technology with speeds of 1.6T and higher, addressing the escalating need for high-bandwidth, low-latency connectivity in AI data centers.

In addition to product collaboration, Qualcomm will further expand its use of AWS AI infrastructure and plans to apply Amazon Bedrock to workloads such as Electronic Design Automation (EDA) to shorten chip R&D cycles. Qualcomm stated that with the rapid growth of AI applications, data centers need to enhance both computing power and interconnect efficiency, and this partnership is precisely focused on these two directions.

To strengthen long-term alignment of interests, Qualcomm has issued warrants to an investment entity under Amazon, allowing it to purchase up to 25 million shares of Qualcomm stock at $161.26 per share. The warrants will expire in 2036, with rights for 3.75 million shares having vested based on initial procurement commitments, while the remainder will vest progressively as conditions are met through commercial agreements, orders, and actual purchases.

Regulatory filings submitted by Qualcomm show that the vesting of all warrants is tied to up to $60 billion in related procurement payments by Amazon. Therefore, this arrangement does not mean Amazon immediately receives 25 million shares; rather, subsequent equity rights are determined by procurement scale, helping connect the long-term partnership between the two sides with actual orders.

For Qualcomm, reaching this multi-generational custom chip partnership with AWS signifies that the company is extending further from the traditional mobile chip market into the AI data center field. As demand for AI training and inference continues to grow, data centers' increasing need for specialized chips and high-speed interconnect technology also opens up new growth space for Qualcomm.