Qualcomm and Amazon Team Up on Custom AI Chips

Qualcomm's stock rose by as much as 8.7% on Tuesday after the company announced a partnership with Amazon to develop custom artificial intelligence (AI) chips.

The agreement will see Qualcomm help Amazon create AI chips for its cloud computing business, while Amazon will deploy Qualcomm's advanced optical connectivity solutions to speed up data transfers across its network.

This deal is significant because it leverages Qualcomm's expertise in energy-efficient processors, which are in high demand due to the shift from AI model training to inference. The latter requires powerful and efficient computing infrastructure, an area where Qualcomm excels.

As part of the agreement, Amazon obtained a warrant to buy up to 25 million shares of Qualcomm's stock at $161.26 per share. The warrant vests in stages based on up to $60 billion in chip orders and related purchases, with an expiration date of September 3, 2036.