Qualcomm shares jumped Tuesday after the chipmaker announced a sweeping, decade-long partnership with Amazon Web Services to build custom AI data center silicon — a deal that hands the smartphone-chip giant a second major cloud anchor customer and could be worth up to $60 billion.

Under the agreement, Qualcomm issued Amazon a warrant for as many as 25 million shares at $161.26 apiece, vesting in tranches as AWS places purchase orders for Qualcomm's server chips, networking hardware and manufacturing services through 2036, according to HotHardware's breakdown of the filing. An initial batch of 3.75 million shares vested immediately based on Amazon's starting commitments.

Chasing Nvidia's Shadow

The companies said they will co-develop custom AI inference silicon across multiple chip generations alongside new optical connectivity technology capable of speeds up to 1.6 terabits per second, aimed at easing the data-bottleneck problems that plague massive AI server farms. Qualcomm CEO Cristiano Amon said in a statement carried by Bloomberg that "data center infrastructure will require advances in both computing and connectivity to deliver greater performance with more efficiency" as AI demand accelerates.

AWS vice president Prasad Kalyanaraman said the collaboration builds on existing work between the two companies and is aimed at giving Amazon's cloud customers "more performant, efficient, and cost-effective infrastructure."

ANOTHER MAJOR STEP IN QUALCOMM'S DIVERSIFICATION BEYOND MOBILE

The deal extends a data center push Qualcomm laid out at its investor day in June, when it unveiled the Dragonfly C1000 server CPU and AI300 inference accelerator — chips the company claims can deliver several times the performance-per-watt of GPU-based systems from rivals, though those figures are Qualcomm's own internal targets rather than independently verified benchmarks. Commercial availability of the C1000 chip isn't expected until 2028.

For Amazon, the tie-up gives AWS a second custom-silicon supplier beyond its in-house Trainium and Graviton chip lines, potentially reducing its dependence on Nvidia GPUs for at least some AI workloads. For Qualcomm, it's a validation of a costly bet to expand beyond smartphone chips, following a similar custom-silicon agreement the company struck with Meta earlier this year.

Qualcomm stock rose sharply on the news before paring some of its gains by the close, part of a broader Tuesday session in which tech and energy shares outperformed while healthcare and financial stocks dragged major indexes lower amid rising Treasury yields and a spike in oil prices.

What's next: Wall Street will be watching Qualcomm's next earnings call for early order volume from AWS, while analysts say the multi-generational structure of the deal means its full financial impact won't be clear for years.