Qualcomm’s AI Hope

Another day, another chip company-A deal. This time, it’s Qualcomm, best known for its mobile phone chips (such as the modem in most iPhones). What Qualcomm is not known for is selling chips for data center servers, despite its valiant attempts to do so in the past. Will this time be different? We’ll see. At least Qualcomm has a customer for its AI chips—Humain, the Saudi Arabian AI startup that’s building data centers in that country. Qualcomm stock jumped 11% on Monday, as stocks tend to do when a company announces an AI deal (see: AMD, Broadcom, Oracle).

Investors may have overreacted. Humain has also announced deals with Nvidia, the dominant AI chip designer, and AMD, which is trying to catch up to Nvidia. Humain is doing what OpenAI has done—hedge its bets on chip supply by striking deals with anyone that has a pulse. That makes sense for the Saudis, but it means there’s no certainty about how significant the Humain deal will end up for Qualcomm. Indeed, Humain’s deals with Nvidia and AMD involve more than twice as much capacity as the one with Qualcomm.