Qualcomm Enters Data Center Processing Market

Written by Emily J. Thompson, Senior Investment Analyst

Source: NASDAQ.COM

Updated: 4 hours ago

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QCOM+3.35%

NOW-0.6%

DELL+2.64%

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Source: NASDAQ.COM

New Market Opportunity: Qualcomm officially enters the AI data center processing market with the launch of its AI200 and AI250 accelerator cards, having secured at least one hyperscaler customer, indicating its potential in the rapidly growing AI sector despite not yet dethroning Nvidia.
Edge Computing Outlook: CEO Amon emphasizes that the biggest opportunity in 2026 lies in edge computing, with global edge AI industry projected to grow at an average annual rate exceeding 20%, suggesting Qualcomm's strategic positioning could yield significant market share.
Dell AI Factory Growth: Dell's AI Factory aids companies in establishing the necessary physical infrastructure for AI, with AI-optimized server sales contributing only $9 billion to last quarter's total revenue, yet the $64 billion in orders and a record backlog of $43 billion indicate strong growth potential.
ServiceNow's Market Performance: Although ServiceNow's stock has dropped over 50% since July, its revenue grew 19% year-over-year and operating income increased by 11%, showcasing its competitive edge in AI applications and IT service management, with analysts largely rating it a strong buy.

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Analyst Views on QCOM

Wall Street analysts forecast QCOM stock price to fall

16 Analyst Rating

10 Buy

5 Hold

1 Sell

Moderate Buy

Current: 238.160

Low

165.00

Averages

197.14

High

225.00

Current: 238.160

Low

165.00

Averages

197.14

High

225.00

Melius Research

Hold

maintain

$170 -> $220

2026-05-18

Reason

Melius Research

Price Target

$170 -> $220

AI Analysis

2026-05-18

maintain

Hold

Reason

Melius Research raised the firm's price target on Qualcomm (QCOM) to $220 from $170 and keeps a Hold rating on the shares. While stating that "nothing really emerged as incrementally good from Trump going to China," the analyst feels "incrementally good" about memory and AI semiconductor makers, raising long-term estimates and targets for all of the firm's Buy-rated "bottleneck stocks, including Micron (MU), Sandisk (SNDK), AMD (AMD), Intel (INTC), and Marvell (MRVL), as well as Hold-rated Qualcomm. The firm continues to believe that semis take market cap, or at least upside, from traditional software companies and non-semis in the Mag 7 long-term, the analyst added.

Freedom Broker

Buy

Hold

downgrade

$165 -> $200

2026-05-13

Reason

Freedom Broker

Price Target

$165 -> $200

2026-05-13

downgrade

Buy

Hold

Reason

Freedom Broker downgraded Qualcomm to Hold from Buy with a price target of $200, up from $165. The firm views the company's fiscal Q2 report as mixed, saying its Q3 outlook is "disappointing across the board." Freedom expects Qualcomm's handset segment revenue to drop nearly 15% in fiscal 2026 followed by a 16% decrease in 2027.

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About QCOM

Qualcomm Incorporated is engaged in the development and commercialization of foundational technologies for the wireless industry, including third generation (3G), fourth generation (4G) and fifth generation (5G) wireless connectivity, and high-performance and low-power computing, including on-device artificial intelligence. Its segments include Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL) and Qualcomm Strategic Initiatives. QCT develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies, including radio frequency front-end, digital cockpit and advanced driver assistance and automated driving, Internet of things including consumer electronic devices, industrial devices and edge networking products. QTL grants licenses or otherwise provides rights to use portions of its intellectual property portfolio that includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.

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Partnership Agreement: Qualcomm has reached a deal with ByteDance to supply chips for its AI data centers, which is expected to enhance Qualcomm's market share in the AI sector and solidify its leadership in the semiconductor industry.
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Rising Market Demand: As AI technology rapidly evolves, the demand for high-performance chips in data centers continues to surge; this collaboration will enable Qualcomm to better meet market needs and strengthen its competitive edge in a crowded marketplace.
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Market Impact: This deal represents a significant win for Qualcomm following the loss of Apple (AAPL) as a long-time customer, demonstrating the company's successful strategic pivot towards AI technology and potentially attracting more clients to its offerings.
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Dell's AI Infrastructure: Dell (DELL) is establishing the physical infrastructure necessary for AI through its AI Factory, with AI-optimized server sales contributing $9 billion to last quarter's $33.4 billion revenue, and a record backlog of $43 billion suggests significant future growth potential.
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Future Growth in AI Sector: Precedence Research forecasts that the global edge AI market will grow at an average annual rate exceeding 20% through 2035, positioning Qualcomm to capture a significant share of this rapidly expanding market due to its technological advancements.