Qualcomm used its fiscal Q4 2026 earnings call on November 4 to make a blunt pitch: phones are shrinking, and AI data centers are supposed to fill the gap. According to The Verge AI, the company expects data center revenue to reach $5 billion by the end of 2027 and $15 billion by 2029, with the business eventually making up around 30 percent of Qualcomm’s revenue.
That’s a big promise from a company that’s only starting to book this revenue.
The quick version
- The problem: The Verge AI reports smartphone sales are down around 20 percent compared to 2025. TradingKey puts Qualcomm’s Q4 handset revenue drop at 26 percent.
- The plan: Grow AI data center revenue through partnerships with companies like Amazon and Meta, both announced earlier this year.
- The starting point: About $650 million in quarterly data center revenue.
- The targets: $5 billion in fiscal 2027 and $15 billion in fiscal 2029.
- The market’s reaction: Shares fell about 6 to 7 percent after hours, on a soft outlook.
The numbers need a closer look
A few details differ across the coverage, and they change how you read the story.
The Verge AI describes $10.4 billion as Qualcomm’s total revenue for 2026. Other earnings coverage reports that figure as revenue for the fourth quarter alone. That matters, because annualizing that quarter gives you something closer to $42 billion. Against that base, $15 billion is a major business line, but it fits the 30 percent long-term goal much better than it would against a $10.4 billion year.
The $650 million also gets described in two ways. The Verge AI frames it as a forecast for the first quarter of 2027, while other reports on the call describe it as revenue in the quarter just reported, mostly from custom chip and connectivity work. Check Qualcomm’s transcript if you need the exact timing.
The $5 billion target is also a fiscal year figure, according to call summaries, with management expecting to exit fiscal 2027 at a $7 billion annual run rate.
Why this matters
What stands out here is the kind of revenue Qualcomm is chasing. Selling phone chips is a volume game tied to consumer upgrade cycles. Selling custom silicon and connectivity to hyperscalers means fewer customers, much bigger orders, and a lot more exposure to AI capital spending.
The timing makes sense too. Big AI buyers want more suppliers, and the appetite for chips still looks bigger than any single vendor can comfortably serve. Qualcomm is betting there’s room for another name on the purchase order.
The comparison with AMD is useful. The Verge AI notes AMD expects over 80 percent of its revenue to eventually come from data centers. Qualcomm’s 30 percent goal looks modest next to that, and I think it’s the more believable number. Qualcomm isn’t trying to become a data center company. It’s trying to stop being a phone company.
The risks
The targets imply very fast growth from a small base. Going from about $650 million a quarter to $15 billion a year takes more than a fivefold jump in roughly three years, and it depends on a short list of giant customers.
Investors don’t seem ready to pay for that future yet. Qualcomm guided to $10.4 billion to $11.2 billion in revenue for the December quarter, which analysts saw as weak, and handsets are still the bulk of today’s business. Management expects them to fall below half of revenue in fiscal 2027.
What to watch next
- Named deployments: Amazon and Meta partnerships are a start, but disclosed volumes will say far more than logos.
- Revenue mix: Custom work and connectivity are one thing. Watch whether Qualcomm’s own AI chips start to carry real weight.
- The $7 billion exit rate: This is the near-term number that will show whether the 2029 target is credible.
- Handset stabilization: If phones keep falling, the data center business has to run faster just to keep total revenue flat.
For practitioners, more serious competition among AI chip suppliers is good news over time, since it can mean more options and more pricing pressure. But that payoff is years out. The next few earnings calls will show whether Qualcomm’s bet is turning into shipped hardware. More details are available in The Verge AI’s original report.