Qualcomm at Goldman Sachs conference: Amazon deal boosts data center push By Investing.com

Tuesday, 08 September 2026 — Qualcomm (QCOM) used the Goldman Sachs Communacopia + Technology Conference 2026 to outline a broader shift away from its smartphone roots, led by a new partnership with Amazon and faster growth in automotive and other markets. Management struck a confident tone, but it also acknowledged pressure in lower-end phones and the challenge of building a wider software ecosystem. Qualcomm said its new agreement with Amazon is the clearest sign yet that its data center strategy is gaining traction. The semiconductor giant, which carries a market capitalization of $187.3 billion and trades at a P/E ratio of 20.4, is currently undervalued according to InvestingPro analysis, placing it among companies on the platform's Most Undervalued list. Akash Palkhiwala, the company's chief financial officer and chief operating officer, called it a landmark deal and said it is only the beginning of a broader push. Palkhiwala said the company sees the Amazon deal as validation of a strategy it had already outlined to investors. He also said another global hyperscaler engagement is moving forward with a similar technology scope, suggesting that Amazon may not be the only large customer in this area. Qualcomm described its data center push as a four-part strategy built around custom silicon, AI accelerators, CPUs and connectivity. Palkhiwala said Qualcomm's edge in data center comes from power efficiency, scale and a broad technology portfolio. He noted that the company is among the top five global semiconductor manufacturers by scale, which he said matters in a market where power and wafer constraints are important. He also said Qualcomm's High Bandwidth Compute technology is designed to stack compute and memory together to deliver very high bandwidth for certain inference tasks. In his words, 'We have the technology assets to go do it,' adding that the company's low-power approach is especially relevant in data center. Management used the conference to reinforce its long-term financial targets, especially in data center and automotive. Qualcomm said the mix shift toward custom products could pressure margins, but that effect should be offset by higher-margin merchant products. The company said the overall gross margin profile should remain stable. The chipmaker's financial foundation appears solid, with a gross profit margin of 54% and return on equity of 34% over the last twelve months. An InvestingPro tip highlights that management has raised its dividend for 23 consecutive years, currently yielding 2.2%, underscoring the company's commitment to shareholder returns. Investors can access 13 additional ProTips and comprehensive analysis through the platform's detailed Pro Research Report, available for QCOM and over 1,400 other US equities. Palkhiwala also said Qualcomm is 'a well-priced, highly diversified, and growing stock,' framing the company as a broader technology platform rather than a single-market supplier. Qualcomm said automotive is moving faster than it expected and is now on track to become its largest chip business in the industry next year. Management said the faster adoption of its automotive products has allowed it to pull forward its revenue target. The company's message was that the business is no longer just a long-term option, but a near-term growth driver. Qualcomm said smartphones are still central to its business, but the market is shifting in ways that could support future growth. Qualcomm said the smartphone experience is moving from app-by-app use toward voice-first and agent-first models. It also said AI compute is becoming more distributed, with dedicated accelerators sitting alongside the main chip. Management added that memory pricing should normalize over time, which could help restore some midrange phone demand. For Qualcomm, the key point is that the premium segment remains healthy while new AI features may help revive broader demand. Beyond phones, Qualcomm said it sees a growing market for personal AI devices, including smart glasses, watches, pendants, pins and dongles. The company said this integrated approach is difficult for competitors to copy. It also said the move from chips to modules and system-in-package products is important because form factor matters more in these devices than in traditional hardware. Qualcomm said its purchase of Modular is intended to address a long-standing weakness in the software stack for modern AI systems. Management said Nvidia's CUDA software stack has been a major competitive advantage in AI. Qualcomm's answer is to offer a more portable software layer that reduces dependence on any one chip maker. Qualcomm said the Amazon deal is not the end of its data center push, but the start of a broader scaling phase. The company said its AI accelerator opportunity is even larger, and that its custom silicon work with hyperscalers gives it a multi-customer, multi-generation path rather than reliance on a single program. During questions, Palkhiwala returned several times to the Amazon deal and the company's broader data center plan. On AI compute, Palkhiwala said demand for tokens in data centers should grow 'very, very significantly,' based on internal usage and enterprise adoption. He said the same trend should also play out at the edge, where Qualcomm expects AI accelerators to become more common in low-power devices. He also said Qualcomm's HBC technology is first aimed at decode workloads, but could later extend across the wider inference stack, including prefill and other stages. Qualcomm's conference message was clear: the company wants investors to see it as a diversified technology supplier with multiple growth engines, not just a smartphone chipmaker. Readers can refer to the full transcript below for more detail. Moderator: Ready to go? Akash Palkhiwala, CFO and COO, Qualcomm: Ready to go. Moderator: Okay. Okay, good morning, everybody. Welcome to the Goldman Sachs Communacopia + Technology Conference. My name is James Schneider. I am the semiconductor analyst here at Goldman, and it is my pleasure to welcome you to our first session of the day. We are very happy to have Qualcomm and CFO and COO, Akash Palkhiwala with us today. Welcome, Akash. Akash Palkhiwala, CFO and COO, Qualcomm: Thank you. Thank you for having me here. Moderator: Akash, I think at the highest level, Qualcomm has been working pretty hard to diversify beyond smartphones over a number of years. I want to get your latest thoughts on the progress, starting with data center, but you had a very exciting announcement this morning. I think a custom silicon agreement with Amazon, multi-year in nature and with some warrants attached to it. Maybe you can unpack that for us, help us dimensionalize the opportunity, both in terms of size, type of products, and so on, to the extent you can. Akash Palkhiwala, CFO and COO, Qualcomm: Sure. First of all, thank you for having me here. A very exciting deal for us. I think as you rightly noted, the company is transforming. We used to be a smartphone, primarily a smartphone company. As we look forward, we are very much a highly diversified company with, I'd say, three legs of the stool. We have smartphones. We have auto IoT and data center. We set pretty compelling targets for our data center business a couple months ago at our Investor Day. Very pleased to announce this strategic transaction with Amazon. It's a first of many as we make progress towards what we laid out. You should think of this as really a landmark deal for us in the data center business. This kicks us off there. It includes two components on the product side. First is customized silicon business with them, multiple generations of that. We are also going to be working with them on optical connectivity solutions, starting with 1.6T and follow-on generations. The transaction includes a warrant agreement that we've outlined in our 8-K that we filed today. But the way it's structured is we issue warrants against purchases of up to $60 billion from Amazon for data center products over the next 10 years. There is an upfront vesting of about 15% of those warrants that's associated with the $60 billion, and that is tied to upfront commitments that are being made by Amazon. The 15% really ties to what they're committing upfront. If you kind of wind back and look at what we had committed at Investor Day, we said approximately $5 billion in revenue in fiscal 2027. Fiscal 2027 starts shortly for us, and this makes our number a very high confidence. It also positions us for fiscal 2028 to deliver strong year-over-year growth from 2027 to 2028. We are also similarly proceeding with the other data center customer that we talked about at Investor Day. A lot of strong progress. We'll start having revenue with Amazon starting the December quarter, and so we're already in production with them. Very excited about how this deal positions us to execute on our targets going forward. We also did set a target of $15 billion in fiscal 2029, and you should think of this agreement as one of the core components that allows us to execute on that. Moderator: Okay, great. I want to come back to all those things Akash Palkhiwala, CFO and COO, Qualcomm: Okay Moderator: and let you unpack it a little bit more, but maybe zooming out again for a second, from a technology perspective, company's long-held expertise in processors, and we are seeing a lot of technologies kind of become more relevant to winning formula in AI overall, specifically networking, storage, and software. So maybe help investors understand or contextualize for us why these are or are not the correct assets to have under the same corporate umbrella, and speak to maybe Qualcomm's right to win in the marketplace against competitors who maybe have a slightly more diversified technology portfolio in some of those areas. Akash Palkhiwala, CFO and COO, Qualcomm: From a data center perspective? Moderator: From a data center perspective. Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. Moderator: Yeah. Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. Let me maybe step back, as you said, and outline the different components of our data center strategy. There are four parts to what we're trying to do. First is custom silicon engagement. Obviously, in addition to Amazon, we've talked about one other global hyperscaler that we're engaged with. I think it's very simple. We have a very strong portfolio of technologies, both from a compute and a connectivity perspective. We also do a lot of chips, especially in advanced nodes. Tremendous expertise of high performance, low power, tremendous expertise of high yield manufacturing. We're bringing all of those things together for our custom silicon engagement. So that's the first part of the business is custom silicon. There's a lot of opportunity in the market. We are obviously a new player, but we have all the technology scale to deliver on what's required there. The second part of the business is AI accelerator. This is an area where the market is going through a transition. We used to have one uniform solution for all kinds of AI accelerator needs. What we're seeing in the market is a disaggregation of compute, where there is certain kind of solutions. GPUs would be very good for certain things. XPUs would be very good for other things. As you break the workloads down into training and inference, as you break inference down into prefill and decode, there's a clear desire from hyperscalers to have customized solutions for various components. One of the challenges in the current set of solutions that are available is memory bandwidth-constrained solutions. Qualcomm has this innovative technology that we outlined at Investor Day. We call it High Bandwidth Compute, which is really kind of stacking compute and memory together to deliver extremely high bandwidth that our customer perfect solution for certain kind of decode workloads within inference. We're very excited about the reaction we're getting from customers. There's more to come on that, but very excited about what that technology brings to the market, something very unique and that the market is looking for. So that's our AI accelerator business. The third is CPU, where we deliver what we think is the leading CPU at the edge in phones and PCs and automotive and industrial devices, and we are bringing that to the data center. This is delivering high performance at low power, low cost, and that's what we are bringing to the table. We have an agreement with Meta as our first customer for silicon solutions in data center, and so excited about that. Finally, connectivity. I think we acquired Alphawave. They had a SerDes that is integrated into a lot of these solutions. Even our custom silicon engagement includes Alphawave SerDes, and they have optical connectivity products that are also a part of the Amazon agreement. I think those four areas, of course, we are a new player, but the fact that we come with so much expertise in chip manufacturing at scale, maybe the broadest technology portfolio on the computing side, and that's what we bring to the table. Moderator: Fair enough. Very helpful overview. Maybe also another high-level question. Clearly, the size of the AI opportunity, I think, is much bigger than a lot of what investors thought about just a few years ago. One point of controversy, though, in the market has been agentic AI and the scale of token demand that is going to generate. At the same time, I think everyone's also talking about constraints, power, supply, other factors, land, power, shell, that can measure or limit the pace in which we can generate those tokens. What's Qualcomm's view on all of this in general? At the end of the day, what's your view on whether AI computing stays confined to data center or moves to the edge? How you position the company and the products around that? Akash Palkhiwala, CFO and COO, Qualcomm: Yeah, great question. First of all, we don't think about it as this or this. If you think about general compute, not AI compute, normal compute, it's always been distributed in the cloud and in the edge. We think AI plays the same way. There are certain things that make sense to run on the edge. There are certain things that would make sense to run on the cloud, and that is the way we expect things to evolve. Now, with our expanded strategy and presence in data center, we have an opportunity to play on both sides, and I'll address both individually. To your specific question on data center, our view is you're going to see demand grow very, very significantly in terms of token. One of my responsibilities is also running IT within Qualcomm, and so as you think about how our engineers use tokens to write software, to design chips, to support customers, we're seeing a massive growth in tokens usage within the company. Of course, that is going to be replicated across every enterprise in the world. It drives a lot of efficiencies, a lot of time to market advantages in terms of being able to launch new products sooner. Our view is there's going to be very significant demand growth for tokens, and there'll be a need to satisfy that through different kinds of solutions. Clearly, there is a constraint on power. There's a constraint on how many wafers are available and just memories available. I think some of those things play to our strength. Our strength has always been delivering performance per watt. In any power-constrained environment, Qualcomm has something unique to offer, and so we're excited that we can bring that to data center. The second thing I'll say is in terms of wafer scale, maybe Qualcomm is one of the top five players in the world, and so us being able to use our wafer scale as a strategic advantage in building our data center business is also very important. I think when you think about data center, we bring all those technologies I just outlined. But in addition to that, in a constrained environment, I think Qualcomm is an advantage position. On the edge, we're seeing a very similar transition on the edge happening over the next couple of years as we're seeing in data center, which is build an AI accelerator that sits next to the main chip. Their job is to really run pervasive AI at very, very low power. We're building very similar to the HBC technology that we talked about in data center. We're building a similar compute plus memory stack as a co-processor that would go into all edge devices. So whether, again, it's phones or cars or PCs or industrial devices, robotics, those are going to be areas where that technology will become relevant. We see data center as an opportunity. We see edge as an opportunity for AI. Moderator: Mm-hmm. Very good. I want to come back to the target you talked about earlier from your Investor Day, $15 billion in FY 2029 for data center revenue. Maybe talk about the underlying assumptions here and are the existing programs, including the one you announced today, enough to get you to that target, or do you need to announce other customers to come to the market to hit that? Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. Let me summarize the data points and then build to the 15. We talked about $5 billion in FY 2027, very high confidence at this point. The year starts in about a month. For us, less than a month, and we have POs, we're building the chips. So that's very high confidence. We also talked about strong growth going into 2028 based on the engagements that we have. So it allows us to grow significantly beyond the $5 billion. Late in 2028, going into 2029, we'll have the Meta engagement with CPU come on top of that. Then we've announced Humane as an AI accelerator customer. They'll be deploying that as well. When you add those four or five things that I outlined, you're already very significantly on your way towards 15, so it doesn't take us a lot more to get to the 15. But don't just think about it like that. I'd say that's the numerical part of the answer, but you should really think about the engagement that we will have will be very broad based, because we're delivering technologies, as I outlined earlier, that the market needs, that the customer needs. So tremendous, I think very well-positioned to take advantage of it. Moderator: Mm-hmm. Fair enough. In the longer run, you've talked about this 5% of market share of a trillion-dollar TAM all in. Help us bridge between what you just said and how you get there, and how much is tied to your assumptions around Arm's server CPU penetration versus x86, and maybe your share within the Arm ecosystem more broadly. Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. Our longer term forecast is not just tied to CPU engagement. Of course, it's CPU, AI accelerator, custom chip, and connectivity, all four franchises that we're building. Specifically on CPU, when we signed our agreement with Meta, the size of the CPU market was a lot less than it's perceived to be today. We're very excited because we have a very strong engagement with one of the top hyperscalers. We're going to deliver what we think is the best performance per watt, performance per area solution in CPUs. We have a tremendous opportunity to grow beyond Meta. The CPU TAM obviously has tripled since then, and so we're talking about over $200 billion a year now, and we see a very significant, about half of that market transitioning over to Arm architecture, where we will have performance leadership. So very well-positioned there. The largest part of the market, obviously, is the AI accelerator market, and we are tackling it two ways. We have the custom chip engagements that we have with various hyperscalers, and these are global hyperscalers, and we're working on their main AI accelerators. This is not kind of ancillary custom chip engagements. The second thing I'll say is we have our HBC technology that delivers the significant performance advantage. So overall, very confident that this is a strong portfolio that doesn't rely on one or two customers, doesn't rely on one or two products. This is multi-gen, multi-product, multi-customer engagement, and that diversity is what gives us the confidence that the opportunity beyond 2029 is much, much bigger. Moderator: Mm-hmm. Just a couple more on data centers before we close out that section. You just talked a minute ago about inference becoming more disaggregated. Distinct requirements for prefill, decode, other stages of the stack, and kind of implies a little bit different architecture than we've seen historically. How's Qualcomm viewing this shift strategically, and where do you think the biggest opportunities for you to participate are? Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. So I think, obviously, when you look at training and inference, we are better suited to inference. Within inference, there is prefill and decode. We are starting with a very keen focus on solving the memory bandwidth problem in decode. So our technology stack, HBC, is uniquely positioned to that. But that is not the end game. That is where we are starting. I think our ability to extend into everything inference is very strong. We have the technology assets to go do it. Because of this stacking technology and being able to deliver this performance at very, very low power, and to your earlier point, given the power constraints in data center, we have something that is unique and the customers see it. The customers see the need for disaggregated computing. I think it just positions us very well in a transforming market where the market is transforming in our favor. Moderator: Yeah. Very good. Then finally, software. Help us understand how the software ecosystem is changing. You bought Modular this year, announced a number of open source initiatives in general around that. Where do you think the market is going? What are some of the challenges you need to overcome to go head to head with software incumbents like Nvidia's CUDA product? How is Modular helping you get there? Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. So software obviously is a very, very important problem statement. One of Nvidia's advantages obviously is CUDA. So what we were missing is a very modern stack that makes it extremely easy to port models onto our silicon. Right? So we met Chris Lattner and Modular, and they were on this mission of building a stack that disaggregates the silicon and works across silicon. So once you port a model on top of the Modular stack, it works across, whether it is Nvidia silicon, AMD silicon, or our silicon. Then they also support AWS and Apple. So it truly disaggregates the need for a specific silicon tied to the stack, and then builds a modern stack that is very easy for developers to work on, but then also allows them to port once and work across different silicon platforms without compromising performance. We just came across this incredible company that is just the right size, right culture for us, that was building something that we were missing. That will become our stack going forward. We are also taking a very friendly approach to open source. We have making the lower layers of the stack, think of it as an Android-like approach, where we are making the stack available to everyone in the industry to deploy. Very optimistic about what it brings, both as a horizontal industry platform, but then something that cuts across everything that Qualcomm makes, whether it is an edge chip or a data center chip. It makes our silicon very accessible to developers, which was the goal in the first place. I think it was a missing piece that we have now resolved, and it comes at the right time as we start scaling our data center products. Moderator: Excellent. Almost 20 minutes in, we have not talked about smartphones yet, so I want to go there. Akash Palkhiwala, CFO and COO, Qualcomm: Please. Moderator: You have a huge installed base across billions of devices and smartphones based on your core processing and wireless technologies. As we move to a world where devices at the edge get more important, especially given the realities of AI we just talked about, what changes should we expect to see in smartphones over the next, say, 3-5 years, both in terms of processing, memory, and so on? Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. It is interesting. I think this is very much people think of it as a mature market, but it is a market that is very much in transition. Let me go through kind of few trends around smartphones. First is kind of building smartphones for agentic experiences. We have obviously been in this touch world that goes app by app. There is a clear vision from a lot of hyperscaler players who are looking for endpoints for their clouds as to building something that is agentic first, that is voice first, and that is a device that where you just give work to an agent, and the agent is figuring out across the apps or across cloud MCPs of how to take out that, execute on the task for you. It is a very different device it is becoming. I think it is a given that the endpoint is that. The question is how long does it take and how the journey happens. But it is a device in transition from that perspective. From a silicon perspective, it is a device in transition because of the disaggregation of AI compute and having this AI accelerator that sits next to the main chip, and how it is going to increase the silicon content in a device. The third thing I will say is there is also this third device being added to the personal device ecosystem that is sometimes connected to the smartphone, sometimes a standalone device. We think of it as a wearable device, a device that can see what you can see, a device that can hear what you can hear, and a device that you can have an agentic AI conversation with. I will say every hyperscaler we know of, every cloud company, model company we know of globally is in the process of building a device like that. Whether it is the big hyperscalers you know in the U.S., the model companies you know in the U.S., the hyperscalers you know in China, every single OEM globally, they are all using Qualcomm chips to build a third device that adds to the smartphone. Very excited about kind of all of those transitions happening at the same time, and we are obviously coming off of a low point in the smartphone cycle given the memory industry dynamics. I think of smartphones as an area that can only offer growth to us given all these vectors. Moderator: Yeah. Tactical question to follow up on that. Akash Palkhiwala, CFO and COO, Qualcomm: Sure. Moderator: I want to sort of ask you sort of how do you think your customers are adapting to sort of the new normal in terms of memory prices and the unit dynamics that impact it has on the market? Clearly, you have already talked about you think Android has bottomed as a market today. How are you thinking about sort of the forward in terms of smartphone unit growth for the broader market, some of the catalysts that might accelerate growth from here? Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. The catalysts are the ones that I just outlined, but maybe to start with the first part of your question. We have seen maybe volume go down by low double digits on smartphones, low teens, over the last year. The impact is largely on the lowest tier and the second lowest tier. So everything below $300. That is where the largest impact has been. Because in a lot of cases, memory has now become more than half of the BOM of the phone, and obviously it makes some of those device prices unsustainable, and so we are seeing an impact there. If you look at the very top of the smartphone market, which is where Qualcomm has the most significant presence, we have actually not seen much of an impact. The prices clearly have gone up, but really kind of when you step back and look at the importance of the phone in the consumer's lives, it is the central device. It is the most important device, right? So you are continuing to see people spend the money they need to spend to get the right phone, and that I think shows up in when you look at the market data as well. So we do not expect that to change. We think the low end of the market will continue to be under pressure. But again, I think as we stand today, we are at the low part of the cycle, and we have all these new vectors in place that improves the opportunity for us going forward. Moderator: Mm-hmm. Okay. We went through a lot of things about how AI is changing, move to the edge, also the impact of agentic. How does this apply to automobiles and your automotive business? How is AI changing the automotive architecture over time and how are you participating in that transition? Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. Incredible set of changes obviously happening in automotive, and we've been at the center of it. I'd say definitely our most successful diversification initiative. Next year, we expect to be the largest chip supplier to the automotive industry. Very well-positioned in terms of driving the transition, not just participating in it. I'll say AI is very deeply integrated into automotive. It started with ADAS. Obviously, AI is the foundation for what happens in autonomous driving, and we are one of the two chip leaders on the autonomous driving side. What is also happening now is AI is becoming central to the cockpit experience as well. So within the car, we're seeing this, your hands are already busy on the wheel. It's difficult for you to go and work the buttons as you're operating the car, and so being able to talk to the car, I think if there are people in the audience who drive a Tesla, you could get very used to talking to Grok while you're driving. Right? It is just a great way to use voice, to use AI, to use voice AI really, to interact with the car and get information, to ask it to do things, and so that is becoming very foundationally getting deployed, in automotive. We're seeing every OEM around the world as kind of the core feature that they're looking to deploy in the next generation cars is around AI. If you allow me, I'll also say that the way we think about robotics is really for us an extension of the automotive opportunity. From a silicon perspective, those things look very similar, and in some ways, a robot is a car standing up. So, we are extending that portfolio, everything we're doing in automotive, those products to robotics as well, and AI is obviously foundational to that. So very excited about this broader category of physical AI that starts with automotive, goes into industrial and robotics, and us being able to take our automotive platform into those areas. Moderator: You see that robotic opportunity as more or less coincident from a product standpoint for you? Akash Palkhiwala, CFO and COO, Qualcomm: A very large leverage of everything we've built from automotive, at least from a silicon perspective. The stack is different, obviously. Moderator: Yeah. Okay. Just in terms of content growth in that automotive market, what areas of that business do you see driving the fastest content growth? Akash Palkhiwala, CFO and COO, Qualcomm: Yeah, tremendous content growth for us. What has happened is we were at our generation three of products. We went to gen four. Now we're beginning to deploy gen five. The compute content growth from gen three to gen five is 8x. A lot more processing, a lot more AI, and we've also transitioned the business from selling chips to selling modules and SiPs, and so we're integrating memory, we're integrating passives, and we're delivering a complete solution to our customers. There's a cost advantage to the customers. There's a performance advantage to the customers. There's obviously content growth for us that comes from that. This sits on top of the fact that there's a demand for a lot more compute. There's a demand for a lot more AI. All of those things are coming together. And that is why when you look at our financials for automotive, we had set a target for $10 billion in revenue in 2031, then we pulled it to 2029. Now we have pulled it back further because we are getting to those numbers much faster than we thought a couple of years ago because of this trend for content growth. Then we are gaining share across the board as well, right? Whether it is the Chinese OEMs or whether it is Europeans or Japanese or Korean or American, we are gaining share across the board in the growing part of the automotive silicon TAM. Moderator: Mm-hmm. I want to talk a little bit about sort of smart glasses and wearables market, which you just brought up a minute ago. What is really needed for this category to move to sort of enthusiast level adoption to broad consumer adoption? Do you see the potential for these kind of smart glasses and other wearables to be used more broadly in things like the enterprise, or is it more of a consumer-centric thing in your view? Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. So I think it is definitely consumer and enterprise, but the way the device is being designed, and maybe I will broaden the category beyond smart glasses, it is a personal AI device that, as I said earlier, you can talk to it can see what you can see, it can hear what you can hear. So you have certain OEMs focusing on glasses. You have others building watches, pendants, pins, dongles, all kinds of devices being built. But each device has the same premise, is a battery-powered high-performance device that is an AI-first device that becomes the interaction point for a user. The reason for glasses is a very reasonable form factor, it is close to your eyes and close to your ears. So it can see what you can see and hear what you can hear, and so that is a form factor that works very well. Outside of the consumer use cases, there is tremendous use case in enterprise. Clearly, this is a platform that allows you to have a lot of efficiencies if you are working on a machine, if you are working in a distribution center in retail, just being able to look at something and get information about it, there is tremendous value around it. So I think we are going to see broad deployment of it. Like automotive, our strategy is also transitioning here. We are transitioning from chips to delivering modules and SiPs, because form factor is so important that we are integrating everything into the smallest possible module that would be very difficult for someone else to do. So when you combine processing, wireless connectivity, AI, along with memory passives, and you put it in the smallest possible module that is performing at very low power, only Qualcomm can do that. I think this is a device that is for us to own, and as the market takes off, you'll see it come through in our financials. Moderator: Great. I think I'm going to be chastised if I don't have the CFO and don't ask any financial questions. Akash Palkhiwala, CFO and COO, Qualcomm: We don't have one. Moderator: How should investors be thinking about the longer-term margin profile for your business? Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. I think at Investor Day, we outlined how we see the margins play out. I think gross margins are going to be somewhere in the range of where we are today. We think there will be a combination of custom products being lower in margin than our current rate, but merchant products being significantly higher, and there will be some weighted average, and we will have to see how the two businesses play out relative to each other. That is our view on gross margins. The operating margin argument for Qualcomm has always been around scale and being able to leverage R&D across everything we are doing. As we grow in these new areas, it just automatically helps our operating margin, and that is the way we are thinking about it. Moderator: Yeah. In terms of then investment balance versus that growth trajectory, maybe talk about that intensity. Akash Palkhiwala, CFO and COO, Qualcomm: Yeah. You should think of our investment increase in OpEx trailing the growth significantly. As we look three years out, we have set a target of 30% operating margins, but really, as we go from there is no reason to invest more. It is really just incremental revenue scale sitting on top of the existing investment base, and so excited about what that combination brings from a financial perspective as well. Moderator: Great. Now we have covered a lot of ground today. As you think about Qualcomm's position in AI, compute data center, et cetera, what do you think investors are still underestimating about your opportunity ahead, and what would you like everybody to take away from this if they only had to take away one thing? Akash Palkhiwala, CFO and COO, Qualcomm: Well, I think obviously investors are very focused on data center. We outlined a compelling strategy and a compelling set of products, but there was a little bit of, "Okay, but I want to see how you execute on it." Today is a key milestone for that. Obviously, very large deal with Amazon. It is not the last one, it is just the first one, and we have a very strong engagement with another hyperscaler that we have not disclosed, but similar to the technology engagement we have with Amazon. I think it is just the beginning. We are executing on everything we said we would execute on, and hopefully today's announcement gives people a lot of confidence that that will be the case. When you look beyond data center, and when you look automotive, IoT, clearly our position is very strong, and we are very well positioned to really execute faster than any target we have set out there as well. Finally, on smartphones, the third leg of the stool, I will say we are at the low point in the cycle. Things can only go up from here, both from a way the market is evolving, but then also from the impact we are seeing from memory in the short term resolving through. It is an opportunity to buy into a well-priced, highly diversified, and growing stock. Moderator: Fantastic. I think unfortunately we are out of time, but Akash, thanks so much for being here. Akash Palkhiwala, CFO and COO, Qualcomm: Thank you so much. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.