Qualcomm's Data Center Chip Sales Surge: A $15 Billion Opportunity by 2029
The data center chip sales industry is experiencing significant growth, with projections indicating a potential increase from zero to $15 billion within four years. The demand for compute in the AI industry has been steadily rising, leading to various requirements for different types of chips. Initially, there was a surge in GPU sales, particularly from Nvidia, followed by a need for high-bandwidth memory. As the era of agentic AI emerges, there is a growing demand for CPUs, such as those offered by Intel.
Qualcomm has seized the opportunity in the data center chip market by securing three major deals with hyperscalers. The company anticipates expanding its data center chip business from virtually nothing in the previous year to a substantial $15 billion by 2029. Qualcomm has already initiated collaborations with leading hyperscalers and is set to launch its next-generation CPUs designed for AI agents, with revenue projections reaching $5 billion in fiscal 2027 and growing to $15 billion by 2029.
The potential market for data center CPUs is vast, with Qualcomm aiming to tap into a total addressable market exceeding $1 trillion across various chip categories. Despite facing competition from industry giants like Intel and Nvidia, Qualcomm sees significant growth opportunities in its device CPU business as the demand for on-device AI continues to rise. The company expects strong earnings growth in the coming years, with management projecting EPS to surpass $18 by 2029.
Investors considering Qualcomm stock should take note of the company's growth prospects and competitive landscape. While Qualcomm presents an attractive opportunity with its forward earnings expectations trading at less than 18 times, investors may also explore other investment options identified by The Motley Fool Stock Advisor analyst team. The team has identified 10 stocks with the potential for substantial returns, offering investors a chance to capitalize on emerging market trends and growth opportunities.