Qualcomm set to report Q4 earnings as it enters AI data center market

Qualcomm (QCOM) will report its fourth quarter earnings after the bell on Wednesday. The announcement comes as the smartphone chip giant seeks to further diversify its business offerings by entering into the AI data center market.

Last week, Qualcomm debuted its AI200 and AI250 data center chips and rack-scale server products. The AI200 will be available in 2026, while the AI250 will land in 2027. A third chip is scheduled for 2028.

A rack-scale server is a server system that can pool computing resources from multiple chips to increase performance capabilities. Nvidia (NVDA) already offers its own rack-scale system, and Advanced Micro Devices (AMD) recently announced its own Helios rack-scale offering.

Qualcomm already sells an AI chip, but this is the first time it’s making a push to compete directly with Nvidia and AMD on their turf.

The move sent Qualcomm stock soaring 11% the day of the announcement. Still, Qualcomm shares are lagging behind Nvidia, AMD, and even Intel (INTC) on the year.

Shares are up just 8% over the past 12 months, while Nvidia stock is up 54% and AMD is up 81%. Shares of Intel have climbed 70%, and the S&P 500 (^GSPC) rose 19%.

For the quarter, Qualcomm is expected to report earnings per share (EPS) of $2.85 on revenue of $10.7 billion, according to Bloomberg consensus estimates. The company saw EPS of $2.69 on revenue of $10.2 billion during the same quarter in 2024.

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Qualcomm generates the bulk of its revenue via the sale of its smartphone chips and through licensing agreements for smartphone technologies. But the market has slowed over the years as smartphones have become more ubiquitous around the globe.

Qualcomm is also dealing with the prospect of losing Apple (AAPL) as a major customer for its wireless chips as the iPhone maker looks to use its own custom chips across its iPhone line. The company already uses the chips in its iPhone 16e and iPhone Air.

Moving into the data center space gives Qualcomm access to a fast-growing market, albeit one dominated by Nvidia and AMD.

“This announcement is a needed diversification away from the low growth smartphone market, which accounts for roughly 75% of [Qualcomm CDMA Technology] revenues, and is addressing a market that we expect to grow to ~$114bn by 2030, with key customers looking for vendor diversity outside of the likes of Nvidia,” BofA Global Research analyst Tal Liani wrote in a note to investors.

Qualcomm’s QCT segment includes its smartphone, internet of things, and automotive businesses and is expected to bring in $9.3 billion, up 7.6% year over year. The QTL licensing segment is anticipated to generate $1.4 billion.