Qualcomm stock explodes 20% after launching powerful AI chips to rival Nvidia and AMD: Here’s what to know

Qualcomm stock surged more than 20% on Monday after the tech giant unveiled its new AI200 and AI250 accelerator chips, marking its official entry into the data center AI race. The move places Qualcomm in direct competition with Nvidia and AMD, which currently dominate the market for artificial intelligence semiconductors.

The company’s announcement signals a bold shift from its traditional focus on mobile and wireless chips to the AI data center space, a market expected to reach trillions in valuation by 2030. Investors reacted strongly, sending Qualcomm’s shares to their highest level in months.

Qualcomm Enters the AI Data Center Arena

Qualcomm revealed that its upcoming AI200 and AI250 chips will be designed specifically for AI inference tasks, the process of running existing AI models, rather than training new ones. This strategic focus positions Qualcomm to serve cloud giants such as Amazon, Google, Microsoft, and OpenAI, which are rapidly expanding their AI infrastructure.

The company’s new chips, built around its Hexagon Neural Processing Units (NPUs), promise to deliver exceptional efficiency with lower power consumption and reduced total cost of ownership compared to competitors. The AI200 will debut in 2026, followed by the AI250 in 2027, and a third version expected by 2028.

A Bold Challenge to Nvidia and AMD Dominance

Nvidia currently commands over 90% of the AI chip market, while AMD holds a distant second place. However, Qualcomm’s entry introduces a serious challenger to the duopoly. Its rack-scale systems can match the performance of full-rack Nvidia GPU servers while consuming comparable energy, around 160 kilowatts per rack.

Unlike its rivals, Qualcomm aims to give customers more flexibility. Clients can purchase complete server racks, individual chips, or customized system components. This modular approach could attract hyperscalers and data center operators seeking cost-effective and energy-efficient alternatives.

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The Market Reacts: Qualcomm Stock Skyrockets

Following the announcement, Qualcomm’s shares (QCOM) surged by more than 20%, reaching $190.38 during Monday’s trading session. This marks one of the company’s largest single-day gains in years. Analysts attributed the jump to investor optimism about Qualcomm’s ability to capture a share of the fast-growing AI infrastructure market.

Financial experts predict that Qualcomm’s expansion could reshape its revenue model, making it less reliant on smartphone chip sales. The company’s AI move aligns with forecasts from McKinsey, which estimates that over $6.7 trillion will be spent on data centers by 2030, most of it on AI-driven infrastructure.

Inside Qualcomm’s Strategic Vision for AI

According to Durga Malladi, Qualcomm’s general manager for data center and edge solutions, the company’s AI chips offer distinct advantages in memory capacity and cost of ownership. Each rack supports 768 GB of memory, surpassing current offerings from Nvidia and AMD.

Malladi added that Qualcomm’s approach allows customers to “mix and match” components, making the company both a competitor and potential supplier to other AI chipmakers. Interestingly, Nvidia and AMD could one day purchase Qualcomm’s CPUs or other parts to power their own systems, a sign of how interconnected and competitive the AI chip ecosystem has become.

Future Outlook: Qualcomm’s Long-Term Play in AI

Qualcomm’s re-entry into the data center market is not without challenges. The company’s earlier attempt in 2017 with its Centriq 2400 platform failed due to stiff competition and internal legal battles. This time, however, the company is better positioned, leveraging its mobile AI expertise and energy-efficient designs.

If Qualcomm can deliver on its promises of lower operational costs and competitive performance, analysts believe it could become a third major force in AI semiconductors, alongside Nvidia and AMD. The next two years will determine whether this pivot cements Qualcomm’s future as a key player in the AI revolution.

FAQ

1. Why did Qualcomm stock rise today?

Qualcomm’s stock surged over 20% after the company announced its new AI200 and AI250 data center chips, signaling a major expansion into the AI chip market dominated by Nvidia and AMD.

2. What are Qualcomm’s AI200 and AI250 chips?

The AI200 and AI250 are Qualcomm’s new AI accelerator chips designed for inference tasks in data centers. They feature high memory capacity, lower power use, and cost-efficient scalability.

3. How do Qualcomm’s AI chips compare to Nvidia and AMD?

Qualcomm’s chips focus on efficiency and affordability, consuming less power while offering comparable performance. Unlike Nvidia’s training-focused GPUs, Qualcomm targets AI inference workloads.

4. When will Qualcomm’s AI chips be available?

The AI200 is expected to launch in 2026, followed by the AI250 in 2027, and a third-generation version by 2028.

5. Is Qualcomm stock a good investment for 2025?

Analysts view Qualcomm’s entry into the AI market as a strong growth opportunity, potentially diversifying its revenue base and strengthening its position in high-performance computing.

6. What companies could use Qualcomm’s AI chips?

Cloud service providers like Google, Microsoft, Amazon, and OpenAI are likely customers, as they expand AI infrastructure and look for alternatives to Nvidia’s GPUs.

7. What’s Qualcomm’s long-term AI strategy?

Qualcomm plans to release new AI chips annually, focusing on inference efficiency, modular systems, and power-optimized server racks to compete in the multi-trillion-dollar AI market.