This article first appeared on GuruFocus.
Qualcomm (NASDAQ:QCOM), the semiconductor designer, said Amazon (NASDAQ:AMZN) could purchase as much as $60 billion of AI data-center products through a long-term collaboration. Advanced Micro Devices (NASDAQ:AMD), Nvidia's (NASDAQ:NVDA) merchant-chip rival, rallied approximately 6.7% to $509.635 Tuesday as investors continued betting on surging demand for AI computing infrastructure.
Warning! GuruFocus has detected 3 Warning Signs with QCOM.
Is QCOM fairly valued? Test your thesis with our free DCF calculator.
AMD's second-quarter results explain that enthusiasm. Revenue soared 50% to $11.54 billion, while data-center sales more than doubled to $6.7 billion. The division now generates roughly 58% of total revenue, placing AI infrastructure firmly at the center of AMD's growth engine.
Qualcomm is targeting $15 billion in annual data-center revenue by 2029, equal to roughly 56% of AMD's current $26.8 billion annualized data-center run rate. Amazon's potential commitment confirms the scale of the opportunity, but it also warns that hyperscalers have the money and motivation to fund alternatives to established merchant chips. AMD's market price now stands 82.57% above its $279.15 GF Value, showing that investors are already paying a steep premium for that AI-fueled growth.