Alphabet has acquired a stake worth nearly $548 million in Qualcomm during the third quarter, strengthening the position of the semiconductor company as it looks to expand beyond its traditional smartphone chip business and capture a larger share of the rapidly growing AI infrastructure market. The investment comes at a challenging time for the smartphone industry, which is facing a significant downturn and prompting chipmakers to diversify their revenue streams.
Qualcomm shares rose 3% in premarket trading following the disclosure. The stock had declined by more than 9% on Thursday after the company reported disappointing September-quarter results, amid a broader market selloff following a Democratic win in the US midterm elections. Alphabet’s investment could provide a positive signal for Qualcomm as it pursues new growth opportunities in data centres and artificial intelligence.
Expanding Partnership
Qualcomm and Google have maintained a longstanding relationship, with Qualcomm’s processors powering a wide range of smartphones running Google’s Android operating system. Their collaboration has expanded into other product categories, reflecting the growing convergence of mobile computing, artificial intelligence and connected devices.
More recently, the companies worked together on Google’s new premium laptop lineup, Googlebook, which runs on Qualcomm processors. In 2024, they also reached an agreement to develop chips and software supporting the adoption of AI technologies in the automotive industry.
These collaborations highlight the potential for the two companies to deepen their engagement across consumer devices and emerging technology markets. For Qualcomm, partnerships with major technology companies remain important as it seeks to reduce its dependence on smartphone-related revenue and establish new business opportunities.
AI Data Centre Ambitions
Qualcomm is increasingly focusing on the data centre market as demand for AI computing infrastructure continues to grow. Over the past year, the company has been engaging with cloud service providers and developing customised AI processors designed to meet the needs of businesses investing in AI capabilities.
The strategy comes as major technology companies seek alternatives to Nvidia’s expensive AI chips and increasingly explore developing their own processors to manage costs, improve performance and gain greater control over their computing infrastructure.
Qualcomm has set an ambitious target of generating $15 billion in data centre chip revenue by 2029. Achieving this goal would represent a significant expansion of its business and position the company as a more prominent supplier in the AI semiconductor ecosystem.
The company has already secured interest from major technology players. In September, Qualcomm struck an agreement with Amazon that allows the technology giant to purchase up to $60 billion worth of Qualcomm AI data centre chips and related products. The arrangement also included warrants giving Amazon the right to purchase Qualcomm shares.
Microsoft and Meta have also supported Qualcomm’s expansion into data centre processors through orders, providing further momentum to its efforts to compete in the AI infrastructure market.
Strategic Investment
Alphabet’s investment underscores the significance of relationships between major technology companies and semiconductor suppliers as competition intensifies around AI computing. While the stake does not, by itself, establish a new commercial agreement, it highlights Qualcomm’s potential as it expands into markets beyond smartphones.
Separately, Alphabet also reported a modest increase in its position in Elon Musk’s SpaceX, holding approximately 555 million shares, compared with 551.2 million previously.
As AI infrastructure spending continues to reshape the semiconductor industry, Qualcomm’s ability to convert partnerships and customer interest into sustained data centre revenue will be critical to its long-term growth strategy.
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