KeyPoints:

1. Qualcomm is planning to launch a custom central processing unit (CPU) designed for data centers, with compatibility to connect

seamlessly with Nvidia’s GPUs and software stack.

2. The data center CPU market is currently dominated by Intel and AMD, while cloud giants like Amazon, Microsoft, and Google are also

pushing forward with their own in-house custom chip initiatives.

3. Wall Street has reacted lukewarmly to Qualcomm’s return to the data center CPU space. The stock currently holds a consensus

analyst rating of "Moderate Buy."

On May 19, 2025, Qualcomm CEO Cristiano Amon announced during the opening keynote at Computex 2025 in Taipei that the company is

re-entering the data center market with a custom CPU designed specifically for AI workloads. This marks Qualcomm’s return to the data

center CPU space after discontinuing its Centriq 2400 project in 2019.

Back in the Fight

Qualcomm is under increasing pressure to pivot its growth strategy. The company has long relied on smartphone chips for over 70% of its

revenue, but the mobile landscape is rapidly shifting. Apple is aggressively moving forward with in-house modem development, while

Samsung and Xiaomi are accelerating their own chip initiatives, intensifying industry competition. Lacking a new growth engine, Qualcomm

is turning to the trillion-dollar data center market—not only as a potential revenue driver, but as a strategic hedge against the mounting

pressure in its core mobile business.

Source: Qualcomm

At the same time, the explosive growth of AI model parameters is driving massive demand for data center compute power. While Nvidia

GPUs dominate the AI stack, they still depend on high-performance CPUs for essential workloads like data preprocessing and task

orchestration. In this Nvidia-led AI ecosystem, Qualcomm aims to position its upcoming CPU as a tightly integrated, high-bandwidth

companion to Nvidia GPUs—bypassing traditional x86 market entry barriers and carving out a new AI compute collaboration path.

Qualcomm’s custom CPU will use Nvidia’s NVLink Fusion interconnect technology, designed to eliminate communication bottlenecks

between CPUs and GPUs in AI workloads. Theoretically, this architecture could deliver superior energy efficiency and system throughput for

AI inference and training, creating a key point of differentiation from Intel and AMD.

Qualcomm entered the data center CPU race through its 2021 acquisition of Nuvia, gaining access to the Phoenix architecture, which it has

since integrated into platforms for data center and edge computing. In 2023, the company launched the Oryon architecture in its

Snapdragon X Elite platform for PCs. More recently, Qualcomm struck a partnership with Saudi Arabia’s sovereign wealth fund–backed AI

firm HUMAIN, under which Qualcomm will supply cutting-edge CPUs and AI solutions for HUMAIN’s data centers.

A Tough Breakthrough

Qualcomm’s return to the data center CPU market faces an immediate challenge: a highly consolidated and entrenched competitive

landscape. The space is currently dominated by Intel and AMD.

As of Q1 2025, Intel still controls a commanding 65.3% share of the data center CPU market, while AMD holds 21.1%, driven by its EPYC

product line. Both companies benefit from decades of technical experience and mature ecosystems in areas such as server motherboard

design and thermal management, leading to deep-rooted customer loyalty.

They also continue to push the envelope in performance and manufacturing. Intel plans to release its Arrow Lake Refresh processors in

2025, with a focus on improving AI inference performance. AMD, for its part, is preparing to launch its Zen 6 architecture to further enhance

energy efficiency. Meanwhile, hyperscalers like Amazon, Microsoft, and Google are advancing their in-house custom chip efforts—such as

AWS’s Graviton and Google’s TPU—further squeezing the space for independent chip vendors.

In comparison, Qualcomm’s CPUs still lack proven performance in mission-critical enterprise workloads like high-density virtualization and

large-scale compute.

Software compatibility is another major hurdle. While Arm architecture dominates in mobile, the data center and PC markets remain deeply

entrenched in the x86 ecosystem. Windows on ARM continues to face compatibility limitations. Even if Qualcomm achieves hardware-level

breakthroughs, a lack of parity with the x86 software experience could significantly hinder enterprise adoption. More importantly, Nvidia

itself is advancing its Grace CPU roadmap, potentially positioning it as a competitor rather than a collaborator to Qualcomm.

Qualcomm’s partnership with HUMAIN, while seen as a potential entry point, also carries geopolitical risks. Saudi Arabia’s tech initiatives are

heavily reliant on external technology and are vulnerable to global tensions—particularly as U.S. export controls on AI chips tighten.

Strategic misalignment with partners may also blunt the impact of the collaboration. HUMAIN’s partnerships with Nvidia and AMD are

significantly larger in scale: Nvidia is building a 500-megawatt AI factory for the firm, and AMD has signed orders reportedly worth over $10

billion. Qualcomm, by contrast, may be relegated to the role of a supplementary supplier—making it unlikely to gain meaningful market share

in the short term.

Wall Street Remains Cautious

Qualcomm’s announcement of a data center CPU compatible with Nvidia’s products has not generated a positive response on Wall Street.

Within 24 hours of the announcement, there were no rating changes or significant analyst commentary, indicating a muted market reaction.

From a long-term growth perspective, Wall Street analysts forecast Qualcomm’s revenue to grow approximately 10% in 2025. However, the

compound annual growth rate (CAGR) is expected to slow to around 2.5% by the end of the decade, reflecting a flattening growth trajectory

in the company’s core business. Even if the data center segment contributes incremental growth, its impact on Qualcomm’s overall revenue

mix is likely to remain limited.

Source: Qualcomm

In terms of ratings, TipRanks currently assigns Qualcomm a “Moderate Buy” consensus rating. While the average price target of $178.31

implies nearly 18% upside from the latest share price of $151.31, recent rating trends show downward pressure with targets drifting toward

the low-$150 range. Overall, the market has yet to develop confidence in Qualcomm’s plans to re-enter the data center CPU space.

Technical Pressure

From a technical perspective, Qualcomm’s recent stock price has been oscillating around the $152 level, displaying a clear consolidation

pattern.

Source: TradingView

Since the beginning of the year, Qualcomm’s stock has traded within a broad range-bound pattern. Resistance is concentrated in the

$157–$160 zone, and a breakout above this level could open the door to challenging the year-to-date high of $175. On the downside, support

is centered near $145; a breakdown below this level could test the April low around $120.

Source: TradingView

Following the announcement of Qualcomm’s return to the data center CPU market, the stock briefly rebounded, but trading volume did not

see a significant increase. This suggests lingering skepticism about the plan’s feasibility and profit potential, failing to trigger meaningful

buying momentum.

The Relative Strength Index (RSI) currently remains in the 50–55 range, showing no clear overbought or oversold signals, indicating neutral

to cautious investor sentiment. The MACD indicator is nearing a bearish crossover, warning of potential short-term volatility and downside

risk.

Source: TradingView

Overall, Qualcomm’s short-term technical outlook appears weak, reflecting a lack of consensus among investors on its data center CPU

strategy. Waiting for further business execution and financial signals is advisable. Technically, a trading range between $145 and $160 may

be the most prudent strategy for now.