Qualcomm (NASDAQ: QCOM) has acquired artificial intelligence software startup Modular Inc. for $3.92 billion, aiming to enhance its position in enterprise AI infrastructure. This acquisition, combined with multi-generation CPU contracts from Meta Platforms (NASDAQ: META) and Microsoft Corporation (NASDAQ: MSFT), marks a significant shift in Qualcomm’s strategy away from cyclical smartphone hardware towards high-margin AI solutions.
The Dragonfly data center portfolio will utilize Qualcomm’s flagship Dragonfly C1000 CPU with over 250 cores and advanced connectivity features. Meta has committed to using this technology for its server fleet starting in the second half of 2028, while Microsoft plans to integrate Qualcomm’s compute technology within its Azure data centers. Analysts project Qualcomm’s data center revenue will increase from $3 billion in fiscal 2027 to $35 billion by fiscal 2031, prompting raised price targets from firms like JPMorgan and Wells Fargo.
To support this expansion, Qualcomm has authorized a $20 billion share repurchase program to offset potential dilution from the Modular acquisition, while its automotive revenue saw a 38% year-on-year increase to $1.33 billion. With a current short interest of 45 million shares, the market dynamics suggest significant upward price movement potential as the enterprise AI momentum builds.
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