Qualcomm (QCOM) Executes $2.4Bn AI Data Center Market Counteroffensive

Qualcomm’s (QCOM) $2.4 billion acquisition of Alphawave highlights the company’s renewed push into the rapidly expanding AI data center market. This move follows Qualcomm’s earlier efforts in the data center CPU space, which were ultimately scaled back due to cost-cutting measures, legal challenges, and intense competition.

It also marks Qualcomm’s second significant acquisition in this arena, following its purchase of Nuvia, as the company seeks to reestablish a foothold in high-performance computing. With a growing range of revenue streams beyond its traditional mobile business, Qualcomm’s strategic pivot into AI and infrastructure markets strengthens the long-term investment case, despite the competitive landscape.

Massive Market Opportunity for QCOM

Investment in AI infrastructure is accelerating at an unprecedented pace. Microsoft (MSFT) has announced plans to spend $80 billion on AI data centers in 2025, while Amazon (AMZN) is committing over $100 billion to similar initiatives. According to McKinsey & Company, global data center investments could reach $6.7 trillion by 2030 to meet the soaring demand for compute power.

This surge is driven not only by the widespread adoption of generative AI and enterprise applications but also by growing geopolitical urgency. Many now view semiconductors as strategic assets—comparable to nuclear technology—prompting nations to make significant investments to secure technological leadership.

One example is the Stargate Project, backed by President Trump, which aims to channel $500 billion into AI infrastructure over the next few years. In this context, it’s no surprise that major tech companies are aggressively positioning themselves to capitalize on what may be one of the most transformative growth opportunities of the decade.

Qualcomm’s Strategic Re-entry Into AI Infrastructure

Qualcomm, best known for its Snapdragon processors that power a majority of smartphones, has been steadily expanding its footprint in AI infrastructure. Its 2021 acquisition of Nuvia marked a strategic re-entry into the high-performance computing space, laying the groundwork for broader ambitions.

In 2025 alone, Qualcomm has made a series of targeted acquisitions, including Autotalks (focused on vehicle-to-everything communication), Edge Impulse (specializing in edge AI development), and most recently, Alphawave Semi.

The Alphawave acquisition provides Qualcomm with critical high-speed wired connectivity and chiplet technologies—key components for scaling AI infrastructure. These advancements position Qualcomm to compete more directly with industry heavyweights like Intel and AMD in the rapidly evolving data center and AI computing markets.

Diversifying Revenue Beyond Handsets

Qualcomm aims to generate $22 billion in non-handset revenue by fiscal year 2029—a sharp increase from the $8.3 billion recorded last year. This target implies a compound annual growth rate (CAGR) of over 20%, highlighting the company’s intention to diversify beyond its core mobile business.

In the first quarter of 2025, QCOM reported a 17% increase in revenue to $11.7 billion, driven by strength in its chipset (QCT) and licensing (QTL) divisions. The company delivered strong profitability, with EPS of $2.83, representing a 15% year-over-year increase.

Segments such as automotive, IoT, PCs, and extended reality (AR/VR) are expected to drive this growth. Diversification is especially critical for Qualcomm, which has historically been heavily reliant on the smartphone market, a sector vulnerable to risks such as OEMs developing in-house chips. Broadening its revenue base could help reduce that dependency and position Qualcomm for more balanced, long-term growth.

Naturally, ambitious projections remain just that—projections. Qualcomm’s success in AI infrastructure is far from guaranteed, given the intense competition from both established players, such as AMD and Intel, and emerging powerhouses like Amazon and Microsoft. In this context, Qualcomm can be viewed as a dark horse—an underdog with significant potential, but one that must execute flawlessly to gain meaningful ground in a rapidly evolving and highly competitive market.

What is the Target Price for QCOM Stock in 2025?

On Wall Street, Qualcomm sports a consensus Moderate Buy rating based on eight Buy, eight Hold, and one Sell rating in the past three months. QCOM’s average stock price target of $177.92 implies a 13% upside potential over the next 12 months. 

See more QCOM analyst ratings

Following its acquisition of Alphawave, Fang Boon Foo, an analyst at DBS, maintained a Buy rating on QCOM with a price target of $180 per share. The analyst noted that the Alphawave acquisition “supports Qualcomm’s efforts to capitalize on the expanding 5G market across various segments such as premium handsets, automotive, IoT, and edge networking, with strong partnerships with industry leaders like Apple, Samsung, Mercedes, and BMW further solidifying its competitive advantage.”

However, not everyone is wearing rose-colored glasses when it comes to Qualcomm. For instance, Aaron Rakers of Wells Fargo has a Sell rating on the stock. He pointed out that the Alphawave acquisition came at a significant premium of 96% over Alphawave’s last closing price.

In addition, “while Alphawave’s technology could complement Qualcomm’s existing CPU and NPU designs, the acquisition’s small scale relative to Qualcomm’s overall operations may not significantly impact its financial performance in the near term,” the analyst said.

Qualcomm Bets Big on AI Infrastructure With Alphawave Deal

Qualcomm’s $2.4 billion acquisition of Alphawave marks a strategic move to establish a more substantial presence in the rapidly expanding AI data center market. While the price tag may appear steep, it likely reflects the unique and critical value of Alphawave’s high-speed connectivity and chiplet technology, complementary assets to Qualcomm’s Oryon CPU and Hexagon NPU processors.

That said, reaching the company’s ambitious goal of $22 billion in non-handset revenue will be no small feat. Qualcomm lacks a proven track record in scaling AI infrastructure, and capturing market share from entrenched incumbents will be a significant challenge.

Still, from an investor’s standpoint, the acquisition positions Qualcomm as a more diversified, full-stack player in a high-growth industry. It also reduces dependence on the cyclical mobile market. While regulatory and execution risks remain, Qualcomm’s calculated expansion into AI infrastructure is a meaningful step forward—and a reason for cautious optimism.