Alphabet built a $548 million stake in Qualcomm during the third quarter, betting on the chipmaker's expansion into data centers as the smartphone market weakens. Qualcomm shares rose 3% in premarket trading after the disclosure, reversing losses from Thursday's 9% selloff tied to disappointing earnings.
Alphabet and Qualcomm have collaborated for years on Android smartphones and recently partnered on Googlebook, a premium laptop line using Qualcomm processors. The companies also signed an agreement in 2024 to develop chips and software for AI in the automotive industry.
The investment backs Qualcomm's push to capture share in AI infrastructure. The chipmaker has spent the past year pitching custom AI processors to cloud providers seeking alternatives to Nvidia's expensive chips. Qualcomm projects data-center chip revenue will reach $15 billion by 2029.
Amazon committed to purchasing up to $60 billion of Qualcomm's AI data-center chips and related products in a September deal that included stock purchase warrants. Microsoft and Meta have also placed orders for Qualcomm's data center processors.
Alphabet separately increased its stake in SpaceX to about 555 million shares from 551.2 million earlier.
Investors tracking GOOGL, QCOM, and the AI infrastructure buildout should monitor Qualcomm's execution against its $15 billion data-center revenue target by 2029 and whether the Alphabet backing accelerates its cloud provider adoption.