Qualcomm: Humain Deal Provides Some AI Upside

Key Morningstar Metrics for Qualcomm

• Fair Value Estimate: $185.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High

Qualcomm QCOM unveiled its AI200 and AI250 chip cards and racks for artificial intelligence, aimed at the AI inference market. Saudi Arabia’s AI investment arm, Humain, agreed to deploy the AI200 and AI250 for 200 MW of data centers starting in 2026.

Why it matters: We’re pleased with the announcements, as we were skeptical about Qualcomm’s data center aspirations, given stout competition from Nvidia NVDA and Advanced Micro Devices AMD. The Humain deal might lead to meaningful revenue for Qualcomm, and any revenue in AI data centers represents upside.

• Data center AI gives the company another avenue for growth and diversification. The firm has been making the right moves by diversifying into autos and PCs, but we didn’t think it was enough to overcome the stagnation in its larger smartphone business. AI might change this narrative.

The bottom line: We raise our fair value estimate for narrow-moat Qualcomm to $185 per share from $170 as we layer in $2 billion of new AI revenue at corporate profitability levels in 2027 and beyond. Shares appear fairly valued.

• Our rough assumption of $2 billion for a 200 MW data center equates to a $10 billion opportunity for its AI processors within a 1 GW data center. This compares with the $50 billion opportunity for Nvidia per GW, but Nvidia has stronger networking capabilities and pricing power.
• Shares rose as much as 20% on the Oct. 27 news, likely thanks to AI headline hype. Shares retreated midday but were still up more than 10%, which we think is a more reasonable share price reaction based on fundamentals.

Big picture: Several technological aspects of the racks remain unanswered, and we think Qualcomm will now be closely examined for its AI execution and roadmap in the years ahead.

• Given the strong, established alternatives in AI to date, Qualcomm must be effective right away to have any chance in AI.
• Ultimately, the Humain deal represents upside for Qualcomm but still doesn’t cement Qualcomm as an AI leader on par with Nvidia, Broadcom AVGO, or AMD.