Qualcomm (QCOM 7.58%) has spent years trying to convince investors it can be more than a smartphone-chip company. At its investor day on Wednesday, it made its boldest case yet. The company nearly doubled its target for non-handset revenue in fiscal 2029, raising the goal to about $40 billion from $22 billion. And for the first time, it put hard numbers behind its data center ambitions, calling for more than $15 billion in data center revenue by that same year.
Investors liked what they heard, and shares jumped sharply on the news, rising as much as 15%.
The figures are bold for a company whose chips still sit mostly inside phones. But raising a target is the easy part. The harder question is whether Qualcomm, a relative latecomer to the data center, can build a business of this size in a market that Nvidia already dominates.
Image source: Getty Images.
A bigger bet beyond the smartphone
Qualcomm’s diversification push isn’t new, but the scale of it is. The company’s prior $22 billion non-handset goal, set in 2024, was already meant to loosen its dependence on smartphones — a maturing market where it also faces the gradual loss of Apple as a modem customer as the iPhone maker shifts to its own in-house modem products. The new $40 billion target nearly doubles that ambition.
The data center, of course, is the centerpiece of the company’s growing ambition. Qualcomm detailed a server processor called the Dragonfly C1000, built around more than 250 of its custom cores, along with a line of artificial intelligence (AI) accelerators designed to run AI models rather than train them. Management is targeting more than $15 billion in data center revenue by fiscal 2029 — up from almost nothing today.
The most important validation came from a customer. Meta Platforms agreed to a multi-year, multi-generation deal to use Qualcomm’s new processor in its data centers, with production starting in the second half of 2028. For a company trying to prove it belongs in the data center, landing one of the world’s biggest spenders on computing infrastructure is a meaningful endorsement.
Qualcomm’s other growth bets are further along. Its automotive revenue rose 38% year over year to a record $1.3 billion in its fiscal second quarter of 2026 (the period ended March 29, 2026), and management is targeting $10 billion in annual automotive revenue by fiscal 2029, backed by a design-win pipeline it now pegs at about $65 billion.
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(-7.58%) $-15.54
Current Price
$189.36
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$216B
Day’s Range
$186.26 – $208.85
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$121.99 – $259.92
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1.5M
Avg Vol
21.6M
Gross Margin
54.80%
Dividend Yield
1.75%
A late start in a crowded market
Still, the targets are a bet, not a result.
Qualcomm is arriving late to a data center market where Nvidia controls the vast majority of AI chip sales and where a deep software ecosystem keeps customers from switching. Qualcomm’s HBC-based AI250 accelerator won’t begin commercial sampling until mid-2027, and the Meta CPU production doesn’t begin until the second half of 2028.
A lot can change between 2026 and the end of 2028.
The current numbers are a reminder of how far the company has to go. Qualcomm’s fiscal Q2 revenue was $10.6 billion, and handset chips still accounted for the largest piece at about $6 billion. Data center revenue is a rounding error by comparison. The $40 billion goal assumes years of strong execution in markets where Qualcomm hasn’t yet proven it can win at scale.
What makes the stock interesting, however, is that investors aren’t paying much for any of this. Qualcomm’s reported fiscal Q2 earnings were inflated by a one-time tax benefit, but on a non-GAAP (adjusted) basis the stock trades at about 17 times earnings — well below the broader market and a fraction of what pricier AI chip names command.
The market, in other words, is treating Qualcomm as a mature smartphone-chip supplier and assigning little value to the data center business it just sketched out.
That mix of a modest valuation and a credible, if unproven, growth story is what makes Qualcomm worth a closer look. Sure, I wouldn’t buy the stock on the strength of a 2029 target alone, and the competitive risks in the data center are real. But the Meta agreement suggests the ambition is more than a slide in an investor presentation — and at this valuation, investors aren’t being asked to pay up for a diversification story that finally seems to be taking shape.
