For two decades, the market has priced Qualcomm as one thing: the company inside your phone. This week it tried to change that.
At its investor day Wednesday, Qualcomm told Wall Street it expects $40 billion in revenue from outside the handset business by fiscal 2029. The old target was $22 billion. Management nearly doubled the number in a single update, and the stock jumped as much as 15% in the sessions that followed before pulling back Friday with the rest of the chip group.
The size of the revision matters more than the headline. Qualcomm is not raising a forecast by 10%. It is telling investors that the part of the company nobody pays for today becomes most of the growth story by the end of the decade.
The data center is the boldest part
The piece that grabbed attention was data center. Qualcomm is targeting more than $15 billion in data-center revenue by fiscal 2029, anchored by a new server processor it calls the Dragonfly C1000.
To prove it is real, the company brought customers. Meta Platforms signed a multi-generation agreement to use Qualcomm CPUs in its next server fleet, making Meta its first data-center customer. Microsoft is also on board. Those are two of the largest buyers of compute on earth, and both already build or backstop their own silicon.
The pitch is not that Qualcomm beats Nvidia at training giant models. Nvidia still owns that market, and at a roughly $4.7 trillion market value the gap in scale is enormous. Qualcomm is going after a different job: running finished models at lower power and lower cost. That is the same opening Broadcom is chasing with custom chips, and it is where the next phase of AI spending is expected to land.
The logic leans on what Qualcomm already knows. It spent two decades squeezing the most performance out of the least battery in a phone. Power efficiency is now the binding constraint in a data center, where electricity, not chips, is becoming the scarce resource. A company that built its name on doing more with less watts is making the case that the skill transfers. Whether buyers agree is the open question, but Meta and Microsoft signing on is the strongest evidence so far that the argument is landing.
Cars and connected devices are already paying
The data-center bet is years out. The rest of the pivot is already on the income statement.
Qualcomm posted record automotive revenue of $1.33 billion last quarter, up 38% from a year earlier. Its automotive design-win pipeline has grown to $65 billion, the backlog of deals already signed with carmakers that converts to revenue as new models ship. Management expects auto to reach $10 billion a year by fiscal 2029.
Add the Internet of Things, which Qualcomm sees topping $14 billion, and the shape of the new company comes into focus. Phones still pay the bills now. Cars, connected devices, and servers are meant to pay them later.
What makes the pivot fundable is the part nobody talks about. Qualcomm's licensing arm collects a royalty on most of the world's smartphones, a high-margin stream that throws off cash whether or not Qualcomm's own chips are inside the device. That cash is what pays for the engineering behind the data-center and automotive push. The smartphone business the market is bored with is the thing financing the businesses it might eventually pay up for.
Why the stock re-rated, and the catch
Qualcomm trades around 21 times forward earnings and yields roughly 1.8%, with a market value near $210 billion. That is a discount to almost every other large chipmaker, precisely because the market has refused to give it credit for anything beyond smartphones.
That is the real bet here. Management set a fiscal 2029 adjusted earnings target above $18 a share, against a consensus closer to $15. If the non-handset business delivers, the multiple investors are willing to pay could move up alongside the earnings. Two levers, pulling the same direction.
The catch is that every number above is a 2029 number. Data center is a brutal market, with Nvidia, AMD, Broadcom, and the cloud giants' in-house chips all fighting for the same sockets. Qualcomm also faces a known hole: Apple is building its own modem, which will erode one of Qualcomm's most profitable lines over the next few years. Targets three years out are promises, not results.
What comes next
The proof will come in conversion. Watch whether the $65 billion auto pipeline keeps turning into reported revenue each quarter, and whether Qualcomm adds a third and fourth named data-center customer beyond Meta and Microsoft. The next earnings report is the first checkpoint on whether this week's promises survive contact with a tougher tape.
For now, Qualcomm has done the one thing it needed to do: give the market a reason to stop calling it a phone company.
