Qualcomm Joins the AI Race: Is QCOM a Must-Buy Stock?

Core Viewpoint - Qualcomm is entering the AI market with new AI-focused accelerators, aiming to diversify beyond its traditional smartphone chip business, which has been impacted by the loss of major customers like Huawei [1][3]. Group 1: Product Launch and Market Timing - Qualcomm launched two AI accelerators, the AI200 and AI250, which are designed for high performance per dollar and watt, potentially driving adoption in the data center market [4]. - The timing of Qualcomm's entry into AI chips aligns with increasing investments in the sector, as cloud giants seek to build systems for generative AI models and chatbots [4]. - The new chips are expected to be commercially available in 2026 and 2027, targeting AI-driven demand [4]. Group 2: Competitive Landscape - The AI data center market is currently dominated by Nvidia, with AMD also gaining market share with its next-generation AI accelerators [5]. - The high cost of switching AI platforms poses a challenge for new entrants like Qualcomm, but its rack-based solutions with direct liquid cooling features offer a competitive edge in energy efficiency and cost-effective performance [5]. Group 3: Customer Engagement and Revenue Expectations - Qualcomm is in discussions with major potential customers, including a leading hyperscaler, indicating early traction in a challenging market [6]. - If these discussions lead to design wins, Qualcomm anticipates meaningful revenue contributions from its AI data center business starting around fiscal 2028 [6]. Group 4: Strategic Acquisitions and Partnerships - Qualcomm's ambitions in the AI data center space are bolstered by its pending acquisition of Alphawave IP Group, which specializes in high-speed connectivity and compute technologies [7]. - This acquisition, expected to close in early 2026, will enhance Qualcomm's data center design capabilities and complement its core processor technologies [7]. - The combination of this acquisition and in-house development of NPU-based accelerators strengthens Qualcomm's vertical integration strategy [7].