While Nvidia Battles AMD, Qualcomm Quietly Signed the Biggest AI Deal in Its History. With ByteDance

You may want to keep hitting the buy button on Qualcomm (NASDAQ:QCOM | QCOM Price Prediction), and the last six weeks handed you three more reasons to do it again. While the financial press tracks every twitch in the Nvidia (NASDAQ:NVDA) versus AMD (NASDAQ:AMD) slap fight, Qualcomm quietly signed the biggest AI deal in its history. The stock has run 100% from its April lows, hitting a 52-week high of $258 along the way.

Reason one: the ByteDance deal changes the story

For years the bear case on Qualcomm was simple. Too dependent on smartphone modems, too exposed to Apple (NASDAQ:AAPL), no real seat at the AI infrastructure table. Then news broke that ByteDance will buy millions of Qualcomm ASICs to power its data centers and AI agent software, including the Doubao chatbot. The stock surged 11.6% in a single session on the news. CEO Cristiano Amon told investors on the Q2 call that the “leading hyperscaler custom silicon engagement is on track for initial shipments later this calendar year.”

This validates the $2.4 billion Alphawave Semi acquisition and the entire data center pivot. Qualcomm has a customer with real volume.

Reason two: automotive just hit a record

While the data center headline grabs attention, the boring compounder underneath keeps producing. Q2 FY26 automotive revenue hit a record $1.326 billion, up 38% year over year. IoT was $1.726 billion, up 9%. Combined, automotive plus IoT grew 20% year over year.

The handset business is fighting memory supply constraints and Chinese OEM softness, and Qualcomm still beat estimates: $10.599 billion in revenue and $2.65 in non-GAAP EPS, the fourth straight quarter of beating both lines.

Q3 guidance is cautious at $9.2 billion to $10 billion in revenue and $2.10 to $2.30 in non-GAAP EPS, with management telling investors that Chinese handset revenues will bottom in Q3 and return to sequential growth the following quarter. I am willing to wait on that.

Reason three: a $20 billion buyback says everything

The board authorized a new $20 billion share repurchase program. Qualcomm has already deployed $5.4 billion in the first half of FY26, including $2.8 billion in Q2 alone (19 million shares).

Add the $0.89 quarterly dividend and full-year FY25 capital return of $12.596 billion, and you have a management team that is not waiting for permission. Free cash flow yield is 5.21%. Return on equity is 23.34%. Interest coverage is 18.6x. This balance sheet can fund the data center build-out and the buyback at the same time.

The risk you should be watching

Apple is the biggest risk here. If Apple completes its in-house modem on an accelerated timeline, Qualcomm loses a chunk of premium handset revenue.

That overhang has shadowed this stock for a decade. What the last year showed is that non-Apple QCT revenue grew 18% in FY25 and combined automotive plus IoT grew 27% year over year for the full year. The diversification shows up as a real number on the income statement now.

Bulls keep adding while others watch Nvidia and AMD

The ByteDance deal gives Qualcomm an AI revenue line that did not exist eighteen months ago. Automotive is compounding at record highs. The buyback shrinks the share count while you sleep. Investor Day on June 24 will put numbers behind the Data Center and Physical AI roadmap.