Qualcomm Shares Jump 20% on AI Chip Launch and $10.37bn Earnings, Challenging Nvidia

Wall Street was caught off guard as Qualcomm shares surged 20% on Monday before closing 11% higher, sending shockwaves through Silicon Valley and intensifying pressure on rivals Nvidia and AMD.

The rally came after the US semiconductor giant announced its long-anticipated expansion into the data-centre market with a new line of artificial-intelligence chips and rack-scale servers.

Qualcomm confirmed plans to launch the AI200 and AI250 platforms, designed to accelerate AI workloads for enterprise and cloud customers.

The AI200, which refers both to Qualcomm's standalone accelerator and the full server rack that houses it, will include a built-in Qualcomm CPU and is set to debut in 2026. The more advanced AI250 will follow in 2027, with a third next-generation model expected in 2028.

Earnings Beat Expectations

The upbeat announcement came alongside better-than-expected financial results. Qualcomm reported quarterly revenue of $10.37 billion (£7.76 billion) and adjusted earnings per share of $2.77 (£1.70), exceeding Wall Street forecasts.

According to Yahoo Finance, the combined effect of the earnings beat and the AI product launch drove the company's shares as much as 20% higher before closing up 11%.

Analysts said investors were encouraged by Qualcomm's growing diversification beyond smartphones. The new AI product line marks the company's first direct move into the high-margin data centre segment, long dominated by Nvidia and AMD.

A Direct Challenge to Industry Leaders

The expansion positions Qualcomm in direct competition with Nvidia's dominant AI accelerator business and AMD's efforts to gain market share. Both rivals have benefited from soaring global demand for high-performance computing chips as artificial intelligence reshapes data infrastructure worldwide.

Qualcomm said the AI200 and AI250 chips will focus on inference processing, the stage where trained AI models are run rather than built. This segment, analysts note, is less saturated and growing faster than the training market, where Nvidia currently holds a near monopoly. The company claims its systems will deliver energy-efficient and cost-effective performance, helping data centre operators cut costs while handling increasingly complex AI workloads.

The announcement also included a strategic partnership with Saudi Arabia's Humain AI, which plans to deploy 200 megawatts of Qualcomm's upcoming systems once they become available. The deal underscores Qualcomm's global ambitions and highlights the Middle East's expanding role in AI infrastructure investment.

Market Reaction and Competitive Pressure

Wall Street analysts described Qualcomm's surprise AI push as a potential disruptor. Barron's reported that the move was viewed as a direct challenge to Nvidia's dominance in AI accelerators and AMD's attempts to expand in the same space.

Nvidia's stock slipped slightly as traders digested the competitive threat, while AMD also saw small declines amid renewed concerns about market share. Market watchers said Qualcomm's foray into data centre chips could put pricing pressure on both companies as competition intensifies across the AI supply chain.

Strategic Shift and Long-Term Goals

The launch builds on Qualcomm's earlier acquisition of UK-based Alphawave IP Group, a $2.4 billion (£1.79 billion) deal that bolstered its data centre connectivity and infrastructure portfolio. Combining its mobile chip efficiency expertise with new server-grade AI technology, Qualcomm aims to capture a significant share of the global AI data centre market, forecast to reach hundreds of billions of dollars by 2030.

The company has set an ambitious long-term target of generating up to $22 billion (£16.47 billion) in annual revenue from its AI, automotive and Internet-of-Things divisions by 2029. Analysts say the shift could help reduce Qualcomm's dependence on smartphone sales, which have faced cyclical downturns in recent years.

Analysts See a Turning Point

Industry experts have described the move as one of Qualcomm's most significant strategic pivots in decades. While the AI200 and AI250 will not generate revenue until mid-decade, the announcement reinforces the company's determination to compete at the highest levels of AI hardware design.

For investors, the strategy marks a defining moment. Qualcomm, long known for its dominance in mobile processors, is repositioning itself at the centre of the global AI computing boom. The company's share surge shows that Wall Street believes its next chapter may be written not in smartphones but in the data centres powering the world's next generation of intelligent systems.