Qualcomm is looking to the data center market as a new growth driver as smartphone demand slows. During its fourth-quarter 2026 earnings call, the group indicated that handset sales dropped by about 20% compared to 2025 and outlined highly ambitious targets for its artificial intelligence infrastructure business.
The message is significant because it shifts the narrative around a company best known for its mobile chips and its central role in the Android ecosystem. Qualcomm is not abandoning that market, but acknowledges that its evolution can no longer rely solely on smartphone upgrade cycles. Instead, data center expansion, fueled by the race for generative AI systems, offers a space where customers are investing aggressively and with multi-year horizons.
The guidance provided by the company reflects the scale of the transition: Qualcomm projects roughly $650 million in data center revenue for the first quarter of 2027, with a target of $5 billion by the end of that year and $15 billion by 2029. The company also explained that, over time, the data center unit could come to represent around 30% of its total revenue.
From smartphone chips to AI infrastructure
For years, Qualcomm’s trajectory has been closely tied to Snapdragon and cellular modems: components found across a massive range of phones, from premium flagships to entry-level devices. While this specialization built the group's market dominance, it also exposes it to the volatility of a mature industry, where device replacements can slow down and phone manufacturers are dealing with increasingly squeezed margins.
Data centers operate on a fundamentally different dynamic. Here, the goal is not to power an individual consumer device, but to deliver compute capacity to cloud platforms and major digital services. AI has made this compute a critically sought-after asset: training and running models demand dedicated infrastructure, and cloud providers are scrambling to scale up available supply.
Qualcomm aims to enter this space through data center AI chips and agreements with large-scale operators. During the year, it had already announced partnerships with Amazon and Meta, two names that reinforce the strategy's credibility as they rank among the world's largest buyers and users of compute capacity. However, available information provides no details regarding volumes, the products actually adopted, or the individual contribution of these agreements to the group's financial forecasts.
It is an important distinction: the existence of partnerships indicates that Qualcomm has access to crucial counterparts, but it does not yet equate to public proof of its ability to convert that access into revenues on the projected scale. The estimated 650 million for the first quarter of 2027 represents the first concrete benchmark the market will be able to observe to measure the plan's progress.
Numbers that change the business profile
The $15 billion target by 2029, if achieved, would significantly change Qualcomm's revenue mix. In the comparison referenced during the presentation, the group projected total revenues of $10.4 billion in 2026: the figures outlined for data centers thus point to a business that would be neither marginal nor experimental, but one of the company's financial pillars.
The forecast of an approximately 30% share of the business should be read in the same light. Qualcomm is signaling to investors that data centers are expected to become a structural component of the group, capable of easing its reliance on the mobile sector. This is not an immediate result: the company places the target over a multi-year horizon and ties the plan's execution to very rapid growth starting as early as 2027.
This shift reflects a broader trend across the semiconductor industry. AI-driven demand has pushed chipmakers and designers to carve out space in cloud infrastructure, where contracts can be larger and more durable than those tied to consumer electronics sales. Qualcomm is not alone: AMD, cited in the comparison that emerged during the earnings presentation, expects that looking ahead, more than 80% of its revenue could come from data centers.
The two strategies are not interchangeable, both in terms of their starting points and their stated objectives. However, they show how the industry considers data centers to be one of the main drivers transforming its business model. For Qualcomm, accustomed to deriving much of its public visibility from smartphones, the shift also carries symbolic value: the mobile chip remains essential, but it is no longer the sole foundation on which to build the future.
The unknowns behind such rapid growth
The forecasts communicated by Qualcomm remain, by their nature, targets rather than achieved results. Moving from an expected 650 million dollars in the first quarter of 2027 to 5 billion by the end of the year implies a sharp acceleration. The leap to 15 billion by 2029 will require not only sustained growth in demand for AI infrastructure, but also that the company successfully converts relationships with major clients into large-scale deployments.
Moreover, the size of the market alone is not enough. Data centers are an environment where hardware platforms, software, and partner networks compete; gaining market share means proving operational reliability, product availability, and cost-effectiveness for operators running global services. Qualcomm has outlined the financial direction of its bet, but has not made public the details that would allow for an in-depth assessment of expected revenue distribution or deployment timelines across individual clients.
Then there is the mobile landscape. A decline of nearly 20% compared to 2025 makes the search for alternative revenue streams more urgent, but it does not automatically turn data centers into a short-term replacement. In 2027, Qualcomm will have to manage both dynamics: defending its traditional business during a weak phase for smartphones and, in parallel, demonstrating that the new venture can deliver on its announced trajectory.
For the market, the next figure to watch will therefore be the start of 2027. Projected revenue for the first quarter will offer an initial test of the gap between ambition and execution. If the trajectory outlined by the company is confirmed, Qualcomm could complement its historic role in telephony with a far more significant presence in data centers. If, however, demand, deployments, or customer timelines were to slow down, the 2029 targets would appear far more difficult to sustain.
