Smartphone Sales Stagnate: Qualcomm Targets $15 Billion in Data Center Revenue Within Three Years

During its fourth fiscal quarter earnings call, Qualcomm laid out clear targets for its data center business: generating roughly $650 million in data center revenue in the first quarter of 2027, reaching $5 billion by the end of that same year, and hitting $15 billion in 2029.

Illustration by Alex Castro / The Verge

Why is Qualcomm in such a rush to roll out this story? Because smartphones are no longer selling well. The Verge's report notes that smartphone sales have dropped by roughly 20% compared to 2025, and a separate report says global smartphone sales have hit a new 14-year low. Qualcomm's main revenue source in the past was its Snapdragon processors, which nearly all flagship Android devices rely on. As the handset market shrinks, the company has to find a second growth engine.

Data centers are the direction it has chosen. Its signed partners already include Amazon AWS, plus the multi-generation chip agreement with Meta announced earlier this year. Qualcomm's playbook is to cooperate around the custom data center chip demands of big enterprise clients. The Verge mentions that Qualcomm's total revenue posted in the same earnings report is $10.4 billion. The $15 billion annual data center revenue target is equivalent to building one and a half more Qualcomms from scratch against that baseline.

The reality is not that simple. The AI data center chip market is currently led by Nvidia, with AMD catching up, and cloud vendors are also developing their own in-house chips: Amazon has Trainium, Google has TPU, Meta has MTIA. Qualcomm is the new face at this table. What it can bring to the table is its decades of experience in low-power chip design. Uncontrollable electricity costs are one of the biggest pain points for data centers, and being able to keep power consumption per unit of compute low is one of the few unique selling points it can promote. Whether this story can turn into actual orders will depend on its product performance.

In the fourth fiscal quarter of 2026, Qualcomm faced performance pressure from its smartphone business, and its management pinned the next three years' growth expectations on the data center segment. The gap from $650 million to $15 billion is 23 times. If it hits the target, Qualcomm's revenue structure will be completely transformed; if it misses, these figures will be brought up and questioned in every earnings call for years to come.