Qualcomm (QCOM) could gain a stronger position in the data center AI segment through Amazon's (AMZN) agreement to buy the company's server chip products, RBC Capital Markets said in a note emailed Wednesday.
Still, the pace of future orders remains uncertain because Amazon works with several chip suppliers, RBC cautioned.
The strategic collaboration includes Amazon buying server chips, technology, systems and manufacturing services under programs covering custom chips and optical connectivity, RBC said.
The investment firm said the deal could eventually represent about $6 billion in additional annual revenue over 10 years if all conditions are met, compared with Qualcomm's prior data center revenue targets of about $300 million for fiscal 2026 and $5 billion for fiscal 2027, which have not moved.
Qualcomm's unchanged forecasts suggest much of the Amazon agreement may already have been included in Qualcomm's earlier plans, but identifying Amazon as one of its two large cloud customers still gives RBC more confidence in future demand, according to the note.
RBC raised its price target for Qualcomm to $180 from $160 while keeping its sector perform rating, saying it wants to see stronger evidence that shipment volumes are increasing.
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