Amazon's $60B AI Chip Deal Sends QCOM Stock Soaring

Qualcomm's stock jumped over 5% in morning trade on Tuesday after Amazon inked a massive 'multi-generation' AI chip deal worth up to $60 billion. The partnership involves customized silicon for AI data centers and will also see the development of optical connectivity solutions capable of supporting speeds of up to 1.6 terabits per second.

The collaboration marks a significant milestone in Qualcomm's effort to build its server-chip business, with Amazon becoming one of the chipmaker's key customers. The companies said they would use Qualcomm's SerDes and optical digital signal processor technologies to address the growing bandwidth demands of AI data centers.

In addition to the commercial agreement, Amazon received a warrant to acquire up to 25 million Qualcomm shares at $161.26 per share. This warrant is tied to various commercial milestones, including the execution of agreements, binding purchase orders, and actual purchases of Qualcomm's server-chip products. The maximum value of the warrant at the exercise price is roughly $4 billion.

Qualcomm's push beyond mobile chips has received a boost with this deal, as the company aims to reduce chip-design cycles and bring new products to market faster. Retail sentiment around QCOM stock improved to 'neutral' from the 'bearish' zone over the past day, with chatter increasing to 'high' levels on Stocktwits.