Qualcomm Launches AI Chips to Challenge Nvidia’s Dominance

Shares in Qualcomm jumped as much as 20% early Monday after the company announced it was launching new artificial-intelligence accelerator chips to rival Nvidia .

The AI200 will start shipping next year and the AI250 in 2027, the company said. Both will be available as stand-alone components or cards that can be added into existing machines.

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The move puts Qualcomm, which has so far mostly focused on semiconductors for mobile devices, in direct competition with Nvidia, which has dominated the market for AI chips. Qualcomm joins Intel and Advanced Micro Devices in trying to mount AI-chip competition against the semiconductor giant.

In an interview, Durga Malladi , a senior vice president at Qualcomm, said that the processors represented the natural evolution of the company’s product line. The company has developed a strong lineup of device-based chips and now wants to scale up its capabilities for AI data centers. Qualcomm says the AI200 and AI250 have an edge because of their memory capabilities and energy efficiency.

“We’re bringing customers extremely high memory bandwidth and extremely low power consumption,” Malladi said. “It’s the best of both worlds.”

Qualcomm is trying to break into the growing market for AI software and services. The demand for AI processing power is sparking a modern-day gold rush , with technology and power companies pumping hundreds of billions of dollars into the sector. Large companies, or hyperscalers , such as Amazon.com and Microsoft could easily spend about $3 trillion by 2030 to build and operate data centers for their businesses, according to BlackRock Investment Institute.

Earlier this month, OpenAI and chip-designer Advanced Micro Devices announced a multibillion-dollar partnership to collaborate on AI data centers that will run on AMD processors, marking one of the most direct challenges yet to industry leader Nvidia.

Troubled chip maker Intel has also made recent inroads into data-center computing by working with Nvidia to design its first data-center CPUs, or central processing units—the computer brains that power most servers.

The first customer for the AI200 chips will be Humain, an AI company established by the Kingdom of Saudi Arabia’s Public Investment Fund, Qualcomm said. Humain plans to deploy 200 megawatts worth of the chips next year at Saudi data centers, to be used mainly for inference computing, or the functions that allow AI models to respond to queries.

The deal expands upon a partnership between Qualcomm and Humain announced in May during President Trump’s visit to a Saudi-U.S. investment forum in the capital of Riyadh.

Humain also announced a partnership with Nvidia at the same event, which involves Humain deploying 500 megawatts of power and purchasing hundreds of thousands of servers powered by Nvidia’s Grace Blackwell chips, its most-advanced semiconductors currently on the market.

Write to Robbie Whelan at robbie.whelan@wsj.com and Gareth Vipers at gareth.vipers@wsj.com