Qualcomm gave Amazon warrants worth $4 billion, vesting on up to $60 billion of chip purchases
Bloomberg reported Amazon signed as a customer for Qualcomm's AI chips, and the SEC filings show Amazon also holds warrants over 25 million Qualcomm shares at $161.26, about $4 billion of face value, vesting against up to $60 billion of purchases. With AWS paying $5 billion upfront for Nvidia racks it cannot power up, the deal is either leverage against Nvidia or demand Qualcomm paid for with its own equity, and Amazon's October 29 print will show which.
Vincent Jiang · 3 min read
Bloomberg reported this month that Amazon−0.72% — Amazon, down 0.72 percent today signed as a customer for Qualcomm's+1.49% — Qualcomm, up 1.49 percent today AI chips, the handset chipmaker's first major Western hyperscaler for data-center silicon 29. The term that decides what the deal means sits in the September SEC filings: Qualcomm granted Amazon warrants to buy up to 25 million shares at $161.26, a potential $4 billion position that vests only as Amazon purchases chips under a relationship sized at up to $60 billion over a decade 67.
The customer Qualcomm paid for
The warrants are options, not free shares: Amazon would pay $4 billion to exercise them, and profits only if Qualcomm's stock holds above $161.26 89. An initial 3.75 million shares vested at signing; the remaining 21.25 million vest in tranches tied to purchases of up to $60 billion through September 2036 810.
Qualcomm says the custom inference chips are already in production, with revenue expected in its fiscal first quarter 2027, the December quarter 1011. That is real alignment. It is also, structurally, Qualcomm paying its largest new customer in its own equity to show up, at the same time Marvell handed Google warrants worth up to $12.2 billion on a similar deal 6.
Why Amazon wanted a second supplier anyway
The pressure on Amazon's side is documented. Internal emails reported by Business Insider show AWS paying about $5 billion for Nvidia−0.54% — Nvidia, down 0.54 percent today GB300 racks upfront in August under a new "Early Rack Receipt" process, with roughly $3 billion more ordered every month 4. Racks are idling in warehouses waiting for power, and one AWS team had no "clear forecasted path" to install them 4.
CEO Andy Jassy says AWS capacity is essentially sold out through 2027, with substantial 2028 pre-booked 5. Trailing twelve-month free cash flow turned negative at $7.6 billion in the second quarter 5. As reported here on October 2 and 3, Amazon has already shifted $8 billion of Nvidia chips off its books 5. A second merchant supplier is negotiating leverage against Nvidia's allocation machine, whatever the warrants cost.
Qualcomm's operating income fell 41% year over year last quarter as revenue slipped
- Revenue
- Operating income
Data
| Revenue | Operating income | |
|---|---|---|
| Q1 '24 | $9.39B | $2.34B |
| Q2 '24 | $9.39B | $2.22B |
| Q3 '24 | $10.24B | $2.58B |
| Q4 '24 | $11.67B | $3.56B |
| Q1 '25 | $10.98B | $3.12B |
| Q2 '25 | $10.37B | $2.76B |
| Q3 '25 | $11.27B | $2.92B |
| Q4 '25 | $12.25B | $3.37B |
| Q1 '26 | $10.6B | $2.31B |
| Q2 '26 | $9.95B | $1.63B |
The counterpoint: the core is shrinking while the pivot is paid in equity
Meta−1.36% — Meta, down 1.36 percent today and Microsoft+0.64% — Microsoft, up 0.64 percent today already back Qualcomm's data-center push, targeting $15 billion of data-center revenue by fiscal 2029 within a $40 billion non-handset goal 611. Yahoo Finance's read is that the stock still trades at a steep discount to the semiconductor sector, "as if the company were just a smartphone supplier" 3.
The complication runs the other way: revenue fell 4% year over year last quarter on a 20% drop in mobile handset processor sales, and QCT segment EBT margins slid from 30% to 26% 110. The filings say the business that funds the pivot is eroding while the pivot's anchor customer was paid in shares 16.
What the October 29 print decides
Amazon reports October 29, and Qualcomm reports November 4 511. The test is plain: rack receipts keep arriving at $3 billion a month into warehouses without power, which supports the vendor-financing read; installation schedules appear, which supports the demand-validation read 45. The warrants vest only against purchases 8, so Qualcomm needs Amazon to spend toward the $60 billion. A customer you paid to arrive has not yet proven it will stay.
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