Qualcomm Data Center Strategy Targets $40B — Can It Rival Nvidia?

Qualcomm’s data center strategy just got its most ambitious public airing yet — and Wall Street took notice. Shares jumped roughly 15% in extended trading on June 24, 2026, after the chipmaker nearly doubled its non-handset revenue projection for fiscal 2029, signaling a company in the middle of a serious identity change.

Key takeaways

• Qualcomm raised its 2029 non-handset revenue target to $40 billion, up from a prior forecast of $22 billion.
• The company is targeting $15 billion in data center revenue by fiscal 2029, anchored by its new Dragonfly C1000 CPU.
• Meta is lined up to use the Dragonfly C1000 when it starts production in 2028.
• Qualcomm began shipping data center processors to a significant hyperscaler as of May 2026.
• Morgan Stanley maintained an Underweight rating on Qualcomm through at least April 2026; any upgrade report circulating as of late June remains unconfirmed.

Morgan Stanley’s Rating: What’s Actually Confirmed

Before diving into Qualcomm’s strategic ambitions, it’s worth getting the analyst picture straight. Morgan Stanley downgraded Qualcomm to Underweight in February 2026, setting a price target of $132 — a clearly bearish call at the time. By April 2026, the firm raised that target to $146, but kept the Underweight rating in place.

As of June 25, 2026, there is no public confirmation of Morgan Stanley upgrading Qualcomm to Equalweight or assigning a $231 price target. Reports suggesting otherwise should be treated with caution. That context matters: the stock’s 15% surge after Investor Day was driven by Qualcomm’s own disclosures, not a confirmed analyst upgrade cycle.

Qualcomm’s Investor Day: A Pivot, Declared Out Loud

On June 24, 2026, Qualcomm held its Investor Day and essentially told the market it was a different company than the one analysts had been modeling. The headline number — non-handset revenue rising to $40 billion by fiscal 2029 from a prior target of just $22 billion — nearly shocked in its scale. For a business that built its reputation on smartphone chips and modems, the ambition is striking.

The data center piece sits at the heart of that shift. Qualcomm set a specific target of over $15 billion in annual data center revenue by fiscal 2029, and it didn’t just announce a number — it came with a product, a customer, and a shipping timeline.

Dragonfly C1000: The Chip Making the Claim Real

The centerpiece of Qualcomm’s data center push is the Dragonfly C1000, a CPU purpose-built for agentic AI workloads. The chip focuses on high computing performance with low power consumption — a combination Qualcomm argues it has already mastered through years of making efficient processors for smartphones and PCs.

Critically, Meta has committed to using the Dragonfly C1000 when it enters production in 2028. That’s not a letter of intent — it’s a named hyperscaler on record. Qualcomm’s CFO Akash Palkhiwala framed it bluntly: “This is not a new relationship. It’s the benefit of what we’ve delivered to them already on the edge, combined with the scale and the expertise and the confidence in Qualcomm, is what makes them engage with us on data center.”

Beyond Meta, Qualcomm said it has secured two deals to make custom silicon chips for hyperscalers, and the company noted it already has existing business with nearly every major hyperscaler through its smartphone chips. Qualcomm also began shipping data center processors to a significant hyperscaler as of May 2026 — meaning this is not a roadmap story alone. Revenue is moving.

Taking on Nvidia, AMD, and Intel Directly

The competitive framing Qualcomm offered was direct. The company positions itself against Nvidia, AMD, and Intel in the data center market — three incumbents that have collectively defined the space for years. CEO Cristiano Amon addressed the obvious skepticism head-on: “When people ask about if it’s late to enter the data center, you should think about scale and execution, or engineering capabilities, or operations and supply chain.”

It’s a pointed argument. Qualcomm’s edge — if it has one — is power efficiency. As hyperscalers increasingly run into energy constraints as the binding limit on data center expansion, chips that deliver more compute per watt carry a real premium. That’s the wedge Qualcomm is targeting. The company also announced the acquisition of Modular, a startup whose software enables AI applications to run across multiple chip architectures — a direct answer to the moat Nvidia holds through its CUDA ecosystem.

What the Revenue Composition Shift Really Means

Until recently, smartphones accounted for roughly two-thirds of Qualcomm’s QCT product revenues. Going forward, handsets are expected to fall to about one-third of QCT revenues. That’s a fundamental rebalancing, driven by growth in data center, automotive, and robotics — not a decline in handset business per se, but a dramatic expansion everywhere else.

Qualcomm also expanded its automotive design-win pipeline to $65 billion and raised its automotive revenue target to $10 billion by fiscal 2029. The company’s adjusted EPS target for that year exceeds $18 per share, well above the analyst consensus of $15.26 tracked by LSEG at the time of the announcement.

The strategic logic is coherent: a company that has spent decades optimizing chips for battery-constrained devices now wants to apply that discipline to power-constrained data centers. Whether execution matches ambition is the open question. Qualcomm is entering a market with deeply entrenched rivals, and Meta’s 2028 production start means the commercial proof points are still roughly two years away.

What the Investor Day achieved, though, was something more immediate: it changed the terms of the debate. Morgan Stanley’s bearish posture — an Underweight rating held since February — was built on a model of Qualcomm as a smartphone company with diversification ambitions. That model looks increasingly incomplete after June 24.

FAQ

Has Morgan Stanley confirmed upgrading Qualcomm to Equalweight with a $231 price target?

No. As of June 25, 2026, there is no public confirmation of Morgan Stanley upgrading Qualcomm to Equalweight or issuing a $231 price target. The firm’s last confirmed actions were a downgrade to Underweight in February 2026 with a $132 target, followed by a target increase to $146 in April 2026 while maintaining the Underweight rating.

What is Qualcomm’s revenue target from data center operations by 2029?

Qualcomm is targeting over $15 billion in annual data center revenue by fiscal 2029, as part of a broader goal to reach $40 billion in total non-handset revenue that year.

What is the focus of Qualcomm’s Dragonfly portfolio?

The Dragonfly portfolio — anchored by the Dragonfly C1000 CPU — targets AI inference workloads and high-bandwidth compute tasks, with an emphasis on delivering high performance at low power consumption. Meta is set to deploy the Dragonfly C1000 when it enters production in 2028.

How does Qualcomm position itself in the data center chip market?

Qualcomm competes directly with Nvidia, AMD, and Intel in the data center market, differentiating itself through power efficiency expertise built over years of designing chips for smartphones and PCs — an advantage it believes is increasingly relevant as energy constraints limit data center growth.

Article produced with the assistance of artificial intelligence and reviewed by the editorial team.