Qualcomm bets on a $200 billion CPU market with its AI data center pivot

Qualcomm spent years as the company inside your phone. Now it wants to be the company inside the data center, too.

At its Investor Day on June 24, 2026, the chipmaker laid out a plan to push hard into AI infrastructure. It set a goal of more than $15 billion in data center revenue by fiscal 2029. Investors liked what they heard: shares jumped more than 12% in after-hours trading.

The pitch rests on a market Qualcomm projects will reach approximately $200 billion for CPUs by fiscal 2029 or 2030.

Dragonfly, Meta, and a much bigger target

The centerpiece of the strategy is a new product family called Dragonfly. Its flagship is the Dragonfly C1000, a server CPU built for agentic AI workloads.

The C1000 uses a multi-chiplet design. Instead of one giant slab of silicon, it stitches together several smaller pieces, an approach that can improve manufacturing yields and flexibility.

The specs are aggressive. The chip packs more than 250 Oryon cores and runs at frequencies above 5 GHz. It is pitched as delivering more than double the performance per watt of competing server CPUs.

Performance per watt matters more than it sounds. Data centers are increasingly limited by how much electricity they can pull, not just how much hardware they can buy. A chip that does twice the work on the same power budget is effectively free capacity.

Qualcomm already has a marquee customer lined up. Meta Platforms signed a multi-generation agreement to use the Dragonfly C1000 in its data center servers. Volume production is slated for the second half of 2028.

Microsoft is also expected to deploy Qualcomm’s High Bandwidth Compute chips, known as HBC. And additional hyperscalers, still unnamed, are likely to start contributing to Qualcomm’s custom-chip revenue before 2026 wraps up.

Along the way, the company is projecting $5 billion in data center revenue for fiscal 2027 as a stepping stone toward the $15 billion-plus goal.

The broader numbers moved too. Qualcomm raised its non-handset revenue target for fiscal 2029 to $40 billion. Its previous target was $22 billion, so the new figure nearly doubles it.

Why Qualcomm needs a second act

By fiscal 2029, the company projects smartphones will account for only about one-third of its total revenue. The rest is supposed to come from data centers, automotive, IoT, industrial applications, robotics, and edge AI platforms.

A crowded field of rivals

The server CPU market has long been dominated by Intel and AMD. Nvidia is also in the mix through its Vera chip. Efficient Arm-based designs have been gaining ground as cloud providers look for alternatives to traditional x86 processors.

Qualcomm’s argument centers on energy efficiency and cost. In environments where power is the bottleneck, it believes its chips can win on total economics rather than raw horsepower alone.

What this means for investors and the chip market

The after-hours jump of more than 12% suggests the market was not fully pricing in Qualcomm’s data center potential before Investor Day.

The Meta deal does a lot of heavy lifting here. Plenty of chip companies announce server ambitions. Far fewer show up with a hyperscaler customer signed to a multi-generation agreement. Add Microsoft’s expected HBC deployment, and Qualcomm has two of the largest buyers of compute in its corner.

The C1000 does not hit volume production until the second half of 2028. The fiscal 2027 projection of $5 billion in data center revenue offers an early checkpoint for whether the $15 billion-plus target for fiscal 2029 is achievable.