Qualcomm Challenges Nvidia with New AI Processors, Igniting Data Center Competition

Qualcomm has officially launched its new AI processors, the AI200 and AI250, directly challenging Nvidia's dominant position in the lucrative data center market. This strategic move signals a significant expansion beyond its traditional mobile chip business, according to pymnts.com on Monday. The announcement marks a bold bid to reshape the artificial intelligence hardware landscape.

These chips are specifically engineered for AI inference workloads, a segment where Qualcomm aims to carve out a substantial share, as reported by techrepublic on Monday. The company emphasizes delivering high performance per dollar per watt for generative AI inference, leveraging its Hexagon NPU technology. This focus targets the growing demand for efficient AI deployment.

The announcement on Monday sent Qualcomm's stock soaring by as much as 20%, marking its biggest single-day gain in over six months, xtb reported. This surge reflects strong investor confidence in Qualcomm's strategic pivot into the high-stakes AI infrastructure market. Shares closed up 19.2% to $201.41, according to techi.

Nvidia currently holds a commanding lead in the AI chip market, controlling close to 90% of the market, according to the Los Angeles Times. However, the AI inference market is rapidly expanding, creating opportunities for new competitors and driving diversification among chip suppliers. Analysts suggest Nvidia's share of the AI data center accelerator market could be 60% in 2025.

The AI200 is slated for commercial availability in 2026, followed by the AI250 in 2027, with Qualcomm committing to an annual release cadence, Seeking Alpha noted. These solutions are based on Qualcomm's Hexagon neural processing units (NPUs), customized for data center AI workloads. The company plans to offer both individual chips and full server setups.

Qualcomm's entry into data center AI is a key part of its broader strategy to diversify revenue streams beyond its core smartphone and licensing business, as highlighted by XTB. This move aims to capitalize on the massive growth in AI infrastructure spending, which is expected to reach trillions by 2030. Qualcomm President Cristiano Amon told CNBC the company aims to make AI "cost-efficient at scale".

• The AI chip market is experiencing explosive growth, with the global AI inference market projected to reach $253.75 billion by 2030, growing at a CAGR of 17.5% from 2025, according to Grand View Research. Nvidia has historically dominated this space, particularly in AI training, but the inference segment is becoming increasingly critical as AI models are deployed at scale across industries.

• Technically, the AI200 will support 768 GB of LPDDR memory per card, offering higher memory capacity and lower cost, qualcomm stated in its announcement. The AI250, available in 2027, introduces an innovative near-memory computing architecture, promising over 10 times higher effective memory bandwidth and significantly lower power consumption, as detailed by Tom's Hardware.

• Qualcomm's strategy specifically targets AI inference, where trained AI models make real-time predictions, rather than the more computationally intensive AI training phase. This focus aligns with the growing demand for efficient, scalable, and cost-effective deployment of generative AI applications across various industries, including chatbots and analytics engines.

• While Nvidia remains a formidable leader with its GPUs, other players like AMD and Intel are also expanding their AI accelerator offerings, pymnts.com reported. Qualcomm's entry intensifies competition, offering customers more options and potentially driving down costs in a market eager for credible alternatives to Nvidia's near-monopoly, SiliconANGLE noted.

• Qualcomm emphasizes that its new chips are engineered for high performance per dollar per watt, aiming to deliver significant operational savings through lower power consumption. This focus on total cost of ownership (TCO) is a key differentiator, appealing to hyperscale cloud providers and enterprises seeking to manage AI expenses more predictably, according to techrepublic.

• Saudi Arabian AI company Humain has already announced plans to deploy 200 megawatts of computing power using Qualcomm's new chips starting in 2026, according to benzinga. This partnership demonstrates the chips' readiness for enterprise-scale workloads across sectors like finance, manufacturing, and healthcare, signaling early market traction.

• This move represents a significant strategic shift for Qualcomm, aiming to diversify its revenue streams beyond its traditional smartphone chip and licensing business. The company has been gradually improving its Hexagon NPUs, leveraging its expertise in power-efficient mobile chip design for data center scalability and efficiency.

• The AI inference market is projected to continue its rapid expansion, driven by edge AI solutions and real-time AI demand, as highlighted by KBV Research. Qualcomm's commitment to an annual product update cycle, similar to Nvidia and AMD, indicates a long-term play in this evolving and highly competitive sector, Seeking Alpha observed.