Qualcomm Targets US$15bn in AI Chips: Can It Take On Nvidia?

Qualcomm (NASDAQ: QCOM) is best known for the chips inside your smartphone. But this week the company laid out a bold plan to become a serious player in the biggest game in tech: artificial intelligence. At its investor day, Qualcomm said it wants to push into the data centres that power AI, a market Nvidia currently dominates. Investors liked what they heard, and the stock surged as much as 15% in after-hours trading before giving back much of that gain to trade around 4% higher. So what exactly is QCOM planning, and can it really take on Nvidia?

Qualcomm’s Big Bet Beyond the Smartphone

For years, Qualcomm has made most of its money from smartphone chips. The trouble is that people upgrade their phones less often these days, so the business grows slowly. Over the past five years, Qualcomm shares have risen just 57%, well behind the wider market.

Now management wants to change the story. It is targeting US$40 billion in non-phone revenue by 2029, double today’s level. A big chunk of that, more than US$15 billion a year, would come from selling chips for AI data centres. The rest comes mainly from automotive chips (a US$10 billion target) and the Internet of Things, including robotics (more than US$14 billion). By 2029, phones would make up only about a third of Qualcomm’s chip sales.

Crucially, Meta, the owner of Facebook and Instagram, has already agreed to use Qualcomm’s new data-centre chip, which is expected to be in production by 2028. That Meta deal is an important early sign that the plan is real, not just talk.

Can It Really Take On Nvidia?

Here is the catch. Nvidia rules the AI chip market, and Qualcomm is a long way behind. To make matters harder, big customers like Amazon and Google are increasingly designing their own chips, so competition for every order is fierce.

Qualcomm’s plan to break in has two parts. On hardware, it is rolling out new data-centre chips, the AI200 in 2026 and the AI250 in 2027, built to run AI at lower power and cost than Nvidia’s. On software, it is buying a company called Modular for about US$3.9 billion. This aims straight at Nvidia’s biggest strength: the software that ties developers to Nvidia’s chips. Modular’s technology lets AI models run across different brands of chips without rewriting the code, which could make switching away from Nvidia far easier.

Qualcomm also has a clever angle of its own: “edge AI”, which means running AI directly on devices like phones and cars rather than in the cloud. That is Qualcomm’s home turf, and it could prove a smarter way in than a head-on fight with Nvidia.

The Investor Takeaway

There is a lot to like. Qualcomm trades at about 23 times earnings, cheap next to most AI stocks, and a successful move into data centres could re-rate the shares higher. But remember: this is a plan, not a result. The new chips are still ramping up, the Modular deal still needs regulatory approval, and Nvidia is not standing still. For now, QCOM looks like one to watch closely rather than a sure thing.

For Australian investors, there is no direct local equivalent, though the same edge-AI theme has a smaller, more speculative local echo in names like BrainChip (ASX: BRN). Qualcomm itself can be bought through brokers that offer US shares for those who want exposure to the next chapter of the AI race.