Qualcomm pivots to AI data centers as smartphone sales weaken

Qualcomm is making a sharp strategic turn toward AI data centers after a roughly 20% drop in smartphone sales versus 2025, with the company saying the new business could eventually account for about 30% of its revenue. The shift, outlined on Qualcomm’s Q4 2026 earnings call, marks a bid to reduce dependence on mobile chips and tap the spending boom around AI infrastructure.

What Qualcomm said on its Q4 2026 call

According to The Verge’s reporting on the earnings call, Qualcomm set out a revenue ramp that would move its data-center business from a relatively small base to a material part of the company by the end of the decade. Management forecast about $650 million in data-center revenue in Q1 2027, rising to $5 billion by the end of 2027 and $15 billion by 2029.

The same presentation framed data centers as a long-term pillar rather than a side project. Qualcomm said the business could eventually make up about 30% of the company. That is a significant claim for a firm best known for smartphone processors and wireless technology, and it signals how seriously management now views AI infrastructure as a growth engine.

By the numbers

Why it matters

For Qualcomm, the move is about more than adding another revenue stream. It is an attempt to rebase the company’s growth story away from smartphones at a time when that market is softening. A 20% drop in phone sales is not a minor wobble for a chipmaker whose identity has long been tied to handsets; it is a pressure point that makes diversification urgent.

The opportunity on the other side is large. AI data centers are among the hottest spending categories in semiconductors, driven by demand for chips that support server workloads and inference systems. Qualcomm is not alone in chasing that demand, but its entrance matters because it broadens the set of suppliers trying to capture the build-out of generative AI infrastructure.

The comparison with AMD also shows how Qualcomm is positioning itself. The Verge noted that Qualcomm’s data-center target is less aggressive than AMD’s long-term mix goal, which is expected to exceed 80%. In other words, Qualcomm is aiming for a meaningful new business line without suggesting it will become almost entirely a data-center company.

How did Qualcomm get here?

Qualcomm has spent years being best known for the parts inside smartphones and for the wireless technology that connects them. That legacy still defines the company, but it can also limit its upside when handset demand weakens. The latest earnings commentary suggests management is increasingly willing to lean on markets outside mobile to keep growth moving.

The broader industry backdrop helps explain the timing. Semiconductor companies are competing for the same AI infrastructure spending that has accelerated across the technology sector. For chipmakers, data centers have become one of the clearest ways to participate in the surge around generative AI, whether through training systems, inference hardware, networking, or related server components.

Qualcomm’s earlier partnerships with Amazon and Meta, referenced in the earnings call, provide a clue about how the company may be trying to enter the market. Those relationships suggest Qualcomm is not starting from zero, although The Verge’s reporting did not specify whether the agreements are commercial supply deals, pilots, or something else. That uncertainty matters because the scale of the revenue targets depends on what those partnerships actually represent.

What exactly is Qualcomm forecasting?

Qualcomm’s projected ramp is unusually explicit. The company said it expects around $650 million in data-center revenue in Q1 2027, followed by $5 billion by the end of 2027 and $15 billion by 2029. If those numbers hold, data centers would move from a small contributor to a major component of Qualcomm’s overall sales mix within just a few years.

The forecast also gives a sense of scale relative to Qualcomm’s existing business. The company reported $10.4 billion in total revenue in 2026, according to The Verge. A $15 billion data-center business in 2029 would therefore be larger than Qualcomm’s 2026 companywide revenue, underscoring just how ambitious the target is.

That does not make the projection unattainable, but it does put the company in the realm of highly aggressive growth plans. Investors will likely focus on the pace of adoption, the products behind the revenue, and whether the company can actually convert early partnerships into recurring sales.

Background: Qualcomm’s smartphone dependence is the problem and the advantage

Qualcomm’s core strength has long been its position in mobile chips and wireless connectivity. That business built the company into one of the best-known names in semiconductors, and it remains central to the firm’s identity. But dependence on smartphone demand can become a vulnerability when the handset cycle cools.

The reported 20% decline in smartphone sales versus 2025 is the immediate trigger for the current shift in emphasis. For a company with such deep exposure to mobile devices, that kind of drop can squeeze growth, weaken the earnings outlook, and force executives to search for a different engine.

AI data centers offer one such engine because demand there has been growing rapidly across the semiconductor sector. The market rewards companies that can supply hardware for the AI build-out, but the field is crowded. Qualcomm’s challenge is to prove it can win share in a market where rivals already have strong relationships and established products.

Qualcomm’s strategy in plain terms

Qualcomm appears to be doing three things at once:

• Reducing reliance on smartphones as handset sales soften.
• Using AI data centers as a second growth pillar.
• Building on early partnerships with large technology customers such as Amazon and Meta.

That is a practical response to current market conditions, but it also introduces execution risk. A strategy is only as strong as the products behind it, and the fact sheet does not say which specific chips or platforms will power the projected ramp.

How does Qualcomm compare with AMD?

Qualcomm’s data-center goal looks ambitious, but The Verge’s comparison suggests it is still more measured than AMD’s long-range ambition. AMD’s eventual target is expected to put more than 80% of revenue in data centers, while Qualcomm said data centers could eventually represent about 30% of its business.

That contrast matters because it shows different levels of reliance on the same market. AMD is effectively betting its future on data centers in a much more dominant way, while Qualcomm is presenting the segment as a major growth driver alongside other businesses. For investors, that distinction affects both the opportunity and the risk profile.

It also reflects the different starting points of the two companies. Qualcomm is coming from a mobile-first base, so even a 30% data-center share would represent a major transformation. AMD, by comparison, is already known for broader compute ambitions and is pushing much harder toward AI infrastructure dependence.

What are the open questions?

Several important details remain unresolved, and they will shape whether Qualcomm’s forecast looks visionary or overly optimistic.

1. Which products will drive the ramp? Qualcomm has not identified the specific data-center chips or systems that will generate the projected revenue.
2. What do the Amazon and Meta partnerships cover? The Verge reported earlier partnerships, but the exact structure of those deals was not specified.
3. Can Qualcomm offset smartphone weakness fast enough? A ramp to $650 million in Q1 2027 is only the first step, and mobile pressure may continue in the meantime.
4. Are the 2027 and 2029 targets achievable? The gap from $650 million to $15 billion in less than three years is steep, even in a fast-growing AI market.

What happens next?

The next checkpoints are built into Qualcomm’s own roadmap. The company’s Q1 2027 numbers will provide the first test of whether the data-center business is moving at the pace management described. The end-of-2027 target, set at $5 billion, will be a much bigger credibility test because it implies rapid commercial adoption.

Beyond that, 2029 is the long-range marker that will show whether Qualcomm can truly make data centers a major share of its business. If the company reaches anything close to the projected $15 billion, it would confirm that Qualcomm has successfully expanded beyond its handset roots. If it falls short, the market will likely see the plan as evidence of ambition rather than execution.

For now, the key thing to watch is whether Qualcomm can turn early partnerships and stated targets into concrete product wins. In a market where investors are rewarding AI infrastructure exposure, the company is trying to make a convincing case that it belongs in the conversation.

Bottom line

Qualcomm’s Q4 2026 earnings call showed a company trying to write a new chapter for itself. With smartphone sales down about 20% versus 2025, management is leaning into AI data centers and projecting that the segment could eventually provide about 30% of revenue. The targets are bold, the timeline is tight, and the stakes are high for a chipmaker looking to grow beyond its mobile core.

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