Qualcomm (QCOM) is reportedly in talks to acquire artificial intelligence chip startup TenTrent. According to reports, the two companies have discussed a valuation range of $8 billion to $10 billion. Negotiations are ongoing and the final price could change or the deal could fall apart.
QCOM stock closed Monday’s regular session up 4.29%, but was down 0.7% in after-hours trading at the time of writing.
QCOM expands AI chip promotion beyond smartphones
The potential acquisition would increase Qualcomm’s focus on AI and data center chips as it seeks to diversify beyond its core business of smartphone and computer processors, The Information reported. The company has been actively seeking ways to compete more effectively in the AI chip market, where rivals continue to expand rapidly.
It is not yet clear whether any contracts will include performance-based milestone payments. Qualcomm may consider a combination of cash and stock for the acquisition.
The San Diego-based chipmaker previously acquired Alphawave Semi for $2.4 billion to improve data transmission technology between chips.
Wells Fargo raises QCOM price target
Beyond the deal, analysts are also looking at near-term catalysts for Qualcomm. A few days ago, Wells Fargo raised its price target on Qualcomm from $160 to $230, implying an increase of nearly 5% from the stock’s previous closing price. TheFly said it maintained its “equal weight” rating ahead of the company’s Investor Day on June 24.
Wells Fargo said Amazon Web Services (AWS), the cloud arm of Amazon.com (AMZN), will likely be Qualcomm’s primary hyperscale ASIC partner, adding that AWS already offers the AI100 Ultra. The company said that price checks look relatively solid compared to other GPU products and sees Investor Day as a potential positive catalyst. Still, it signaled an important risk to whether Qualcomm’s near-memory processing design can stand out in the fast-moving AI chip market.
Tenstorrent’s position in AI chips
Tenstorrent designs processors that it claims can run certain AI workloads more efficiently than traditional GPUs used by companies like Nvidia (NVDA). The startup was founded by Jim Keller, a chip architect who has worked on Apple processors and Tesla’s Autopilot hardware.
The company had previously considered raising capital at a valuation of about $3.2 billion, but it’s unclear whether that round has closed. According to The Information, the company has raised more than $1 billion from investors including Samsung Securities, Fidelity, AFW Partners, and Eclipse Ventures.
Competition in AI hardware
The deal, if completed, would add to a wave of acquisitions and investments in AI chip startups by big tech companies.
Nvidia has recently signed large licensing deals related to AI chip efficiency, while Meta Platforms (META) has also been acquiring chip startups to accelerate internal silicon development.
According to a Bloomberg report in May, Tenstorrent is also attracting early acquisition interest from Intel (INTL).
QCOM stock: What retail sentiment tells us
On Stocktwits, retail sentiment for QCOM was “neutral” and unchanged over the past week, but message volume was “high.”
Over the past 30 days, QCOM’s watcher count has increased by 1.6%, and message volume has skyrocketed by 200% over the same period.
of Qcom stock It’s up more than 40% in the past 12 months.
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