Qualcomm's Shareholders Get a $20 Billion Reason to Cheer as Cloud Ambitions Take Shape

Qualcomm shares jump nearly 16% after strong earnings, $20B buyback, and entry into data center chips, signaling a shift beyond smartphones.

Qualcomm’s stock surged nearly 16% on Thursday, climbing to €153.16 and closing in on its 52-week high of €161.72, as investors digested a double dose of good news: a better-than-expected quarterly earnings beat and a bold new chapter in the chipmaker’s strategic evolution. The rally, which some reports pegged at over 12%, reflects growing confidence that Qualcomm is finally breaking free from its smartphone-centric past.

The company reported adjusted earnings per share of $2.65 for the second quarter of its fiscal year, comfortably above the analyst consensus of $2.56 and at the high end of its own guidance. Revenue came in at $10.6 billion, in line with expectations, but the real fireworks came from two other fronts: a massive capital return program and a long-awaited push into cloud infrastructure.

Qualcomm’s board has authorized a staggering $20 billion in share buybacks, while the quarterly dividend is set to rise to $0.92 per share. In the most recent quarter alone, the company returned $3.7 billion to shareholders, including roughly $2.8 billion in stock repurchases. The message is clear: Qualcomm’s cash generation remains robust even as it navigates structural shifts in the semiconductor landscape.

The automotive division, once a sideline business, is now stealing the spotlight. Revenue from the segment jumped 38% year-over-year to $1.3 billion, pushing its annual run rate past the $5 billion mark for the first time. Management expects that figure to accelerate further, targeting a run rate above $6 billion by the end of the fiscal year. For the third quarter, Qualcomm is forecasting automotive revenue growth of around 50%.

But perhaps the most significant strategic move is Qualcomm’s entry into the data center market. Starting in the December quarter, the company will begin shipping custom chips — including CPUs, AI accelerators, and specialized ASICs — to a major hyperscaler partner. This marks a decisive break from Qualcomm’s traditional reliance on mobile devices and positions it to compete in the lucrative cloud infrastructure space.

The smartphone business, while stable at $6 billion in revenue, is no longer the sole growth engine. Qualcomm’s CEO Cristiano Amon sees the cyclical trough in China’s handset market as having passed, with a broad recovery expected in the months ahead. The company is also pushing AI hardware deeper into smartphones and digital cockpits, leveraging technology from earlier acquisitions.

The IoT segment added another $1.7 billion in revenue, up 9% from a year ago, underscoring the breadth of Qualcomm’s diversification efforts. Analysts view the cloud push as a necessary step to reduce dependence on the mobile sector, which continues to face headwinds from memory chip shortages.

For now, the focus is on execution. The December-quarter delivery to the first major cloud partner represents a critical milestone, and management is expected to unveil more details on its long-term data center strategy at an investor day in June. With a $20 billion buyback program and a surging automotive business, Qualcomm is giving shareholders plenty of reasons to stay on board.