QCOM Stock Jumps After Amazon Inks $60B 'Multi-Generation' AI Chip Deal

(MENAFN- AsiaNet News)

• Amazon received a warrant to acquire up to 25 million Qualcomm shares at $161.26 per share, with vesting based on commercial milestones.
• The warrants' vesting is tied to arrangements involving up to $60 billion in payments to Qualcomm.
• Of the 25 million shares, 3.75 million vested immediately based on Amazon's initial purchase commitments.

Qualcomm (QCOM) shares rose in morning trade on Tuesday after Amazon (AMZN) expanded its partnership with the chipmaker to develop customized silicon for AI data centers, with the deal potentially tied to up to $60 billion in payments to Qualcomm.

QCOM stock rose over 5% in morning trade and was among the top trending tickers on Stocktwits at the time of writing. Meanwhile, AMZN stock slipped by around 1.2% amid broader market weakness.

The companies said the relationship was a“multi-generation” collaboration focused on customized chips for AI inference, the stage where trained AI models generate responses and predictions.

Qualcomm and Amazon will also develop optical connectivity solutions capable of supporting speeds of up to 1.6 terabits per second, as well as future-generation products. The project will use Qualcomm's SerDes and optical digital signal processor technologies to address the growing bandwidth demands of AI data centers.

Amazon Warrant Tied To Commercial Milestones

The partnership also includes a significant equity component. Qualcomm said in a regulatory filing that it issued an affiliate of Amazon a warrant to acquire up to 25 million Qualcomm shares at an exercise price of $161.26 per share. The warrant expires in 2036 and allows for cashless exercise.

The shares will vest in tranches tied to the commercial relationship, including the execution of agreements, binding purchase orders and actual purchases of Qualcomm's server-chip products, technology, systems and manufacturing services.

Those vesting conditions are tied to up to $60 billion in payments to Qualcomm, with 3.75 million shares already vested based on Amazon's initial purchase commitments. The maximum value of the warrant at the $161.26 exercise price is roughly $4 billion.

Qualcomm Looks Beyond Mobile Chips

The Amazon deal could give Qualcomm a meaningful customer as it works to build its server-chip business. The company is also deepening its use of Amazon Web Services' AI infrastructure, including Amazon Bedrock, for electronic design automation workloads.

Qualcomm said the goal is to reduce chip-design cycles, potentially helping it bring new products to market faster.

How Is Retail Feeling About QCOM Stock?

On Stocktwits, retail sentiment around QCOM improved to 'neutral' from the 'bearish' zone over the past day, while chatter increased to 'high' from 'normal' levels. 

QCOM stock retail sentiment on September 8 as of 10:30 a.m. ET | Source: Stocktwits

Some retail traders focused on Qualcomm's push beyond smartphones and viewed the Amazon partnership as validation of its diversification strategy. 

View this Stocktwits post

One trader focused on the warrant's exercise price, stating that Amazon's equity position could make that level an important reference point for QCOM shares.

View this Stocktwits post

QCOM stock has gained around 2% this year and risen over 10% in the last 12 months.

Read also: Samsung, TSMC Commit To ASML's Next-Gen Chip Machines, But Intel Got There First

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