Amazon Pays $4.03 Billion to Exercise. Our Model Sits 25% Under Qualcomm's $5 Billion Target.

The obvious question about Tuesday morning's filing is how big the Amazon deal is. It is also unanswerable. Neither company has published a dollar of committed purchases, the commercial agreement is private, and the one number in circulation — $60 billion — is a ceiling written into a vesting schedule, not an order. Ask how big the deal is and you will be told a maximum, which is the answer to a different question.

The answerable question is narrower, and it is the only public, dated, quantified thing about this arrangement: what did Qualcomm pay to get Amazon's business, and what does the price imply about the revenue it expects to book? A supplier that hands a customer equity has revealed something. It has told you what it thought the business was worth, on what schedule, and how much of itself it was willing to give up per dollar of orders. Those are computable from the filing. And because we already publish a forward model for Qualcomm's data-centre line — one that deliberately sits below management's own targets — the answer can be checked against a number that existed before the announcement.

Here is what the filing says, then what it costs, then what it does to the model.

What is actually on file

On September 3, Qualcomm issued a warrant to Amazon.com NV Investment Holdings LLC to acquire up to 25,000,000 shares at an exercise price of $161.26 per share. It disclosed it in a current report on the morning of September 8. The warrant permits cashless exercise and expires on September 3, 2036.

Multiply the two figures and you get $4,031,500,000. That is the aggregate exercise price — the cash Amazon would hand Qualcomm to exercise in full. It is money moving toward Qualcomm. It is not value transferred to Amazon, and the warrant is not a stake.

The wire cycle inverted it anyway. Reuters reported that Qualcomm "granted Amazon warrants worth about $4 billion" and that Amazon "could buy up to $60 billion of its AI data-center chips"; The Next Web's headline read "Qualcomm hands Amazon $4B of warrants," under a line saying Amazon is being paid in equity to become a customer. The first restates a strike notional as a gift. The second restates a vesting ceiling as a purchase order.

We corrected the identical pair of errors three weeks ago, on Google's Marvell warrant, where $12.18 billion of aggregate exercise price was reported as $12.18 billion of value handed to Google. That is twice in twenty days, on two of the year's largest custom-silicon agreements. The correction is no longer the interesting part. What the two structures reveal, side by side, is.

The points

• 25,000,000 shares is 2.34% of the 1,069 million diluted shares Qualcomm reported for the June quarter. The whole warrant, fully vested and fully exercised, is a low-single-digit dilution event.
• 3,750,000 shares — exactly 15.00% — vested on issuance, "based on initial purchase commitments." Qualcomm has not said what those commitments are worth.
• The other 21,250,000 shares, 85.00%, are unearned. They vest against binding purchase orders and actual purchases, up to a maximum of $60 billion in payments, running to 2036.
• The strike is 4.3% below the market. Qualcomm closed at $168.57 on September 3, the day the warrant was issued. Amazon's right to buy was struck at $161.26 — in the money from the first day.
• $60 billion is 1.36× Qualcomm's revenue of the last four reported quarters ($44.069 billion). Spread evenly over the warrant's ten-year term it is $6.0 billion a year, or 13.6% of that base annually.
• The warrant is $320.8 million in the money at the September 8 close of $174.09 — the vested tranche $48.1 million. Those are the numbers a $4 billion headline is standing in front of.
• The press release mentions none of it. Qualcomm's own announcement covers customised silicon for AI inference, optical connectivity to 1.6T, SerDes and optical DSP work, and Qualcomm's use of AWS for chip-design workloads. No warrant, no $4 billion, no $60 billion, no share count.

Fifteen percent vested, and nobody has said what it cost

The filing's most informative sentence is also its shortest: 3,750,000 shares vested on issuance "based on initial purchase commitments." Amazon has already committed to something. Qualcomm priced that something at 15% of a 25-million-share warrant.

The temptation is to multiply. Fifteen percent of $60 billion is $9 billion, and that figure was circulating within hours of the filing. It is not in the document and it is not what the CFO said. Akash Palkhiwala, speaking at a Goldman Sachs conference the same morning, described "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" — a proportion, with no dollar attached.

This is where most analysis quietly invents a number. We are not going to. The warrant vests "in tranches," and the tranche schedule has not been filed. Without it, 15% of the shares does not map to 15% of the ceiling, and $9 billion is a guess wearing arithmetic.

What can be said is the shape. If vesting were linear across all 25 million shares against the full $60 billion — and this is our inference, not a disclosure — Amazon would earn one share for every $2,400 of purchases. Google's Marvell warrant, whose tranche structure was filed, works out to one share per $2,083 of custom-product revenue. Two hyperscalers, two suppliers, three weeks apart, both in the low thousands of dollars of orders per share. That is roughly what a share of a merchant silicon vendor costs right now, measured in the only currency a hyperscaler is willing to spend.

Qualcomm gave away less of itself than Marvell did

Both structures are fully disclosed on the two axes that matter, so they can be laid alongside each other without estimating anything.

Per billion dollars of orders, Qualcomm gave away 28.8% less of itself than Marvell did. Part of that is size — Marvell is the smaller company, so any given share count is a bigger slice of it — and part is negotiating position. Either way it cuts against the intuition. Marvell reported $1.833 billion of data-centre revenue in its April quarter; Qualcomm's entire data-centre-and-other line was $165 million in June. The one with nothing to show got the better terms.

The moneyness is where the two deals stop differing, and it is the more interesting number. Marvell issued Google's warrant on August 18 at a $206.58 strike against a $216.00 close that day — 4.4% below the market. Qualcomm issued Amazon's on September 3 at $161.26 against a $168.57 close — 4.3% below. Two separate negotiations, three weeks apart, landing within three basis points of each other. Both warrants were in the money on day one; Qualcomm's carried $182.8 million of intrinsic value at issuance.

Neither company has said how its strike was set, and $161.26 matches none of the common trailing averages of closes running into September 3. A volume-weighted average over some unstated window is the obvious guess, and it is a guess.

One correction to our own August piece, which put Marvell's strike 5.8% above the market: that comparison ran against a build-time price snapshot of $195.22 that was already well behind the tape. Measured against Marvell's actual August 18 close, the strike was below the market, not above it — which is why the two deals look alike here rather than opposed.

A customer warrant lands in revenue, not below the line

The open question at the end of our Marvell piece was how a warrant like this is accounted for. Marvell answered it nine days later, in the quarterly report for its period ended August 1 — not for the Google warrant, which was issued after that quarter closed, but for two earlier customer warrants, issued in its fiscal 2025 and fiscal 2026.

The treatment is explicit. Those shares "vest primarily based on the customer's achievement of qualifying product revenue milestones and are recognized as a reduction to revenue as qualifying revenues are recognized during the vesting term." Not an operating expense, not a below-the-line charge: contra-revenue. Every dollar of qualifying sales arrives on the income statement already reduced by a slice of the warrant's cost.

Marvell also published what an auditor thinks these things are worth at grant, using Black-Scholes:

• A 4.2-million-share warrant struck at $87.77, seven-year term — grant-date fair value $54.44 per share, $227.6 million in total. That is 62% of the exercise price.
• A 1.0-million-share warrant struck at $87.00, six-year term — $53.02 per share, $55.4 million total. 61% of the exercise price.

Qualcomm has published no equivalent figure and is not required to until its annual report. But the comparison bounds the question, and the direction of the caveat is knowable: Qualcomm's warrant runs ten years against Marvell's six and seven, and a longer option is worth more, not less. Take 60% of the $161.26 strike as a conservative anchor — ours, transplanted from Marvell's disclosure, not Qualcomm's number — and the whole 25-million-share warrant is worth roughly $2.4 to $2.5 billion at grant, against a $4.03 billion headline.

Spread that across the $60 billion it can vest against and the running cost is about four cents in every dollar of Amazon revenue, taken off the top line as it is booked. That is the number to hold onto for the next section, because it is far smaller than the thing it is supposed to be evidence for.

The line this is collateral for printed $165 million last quarter

Qualcomm does not disclose Data Center revenue separately. It reports a combined nonreportable segment, which also contains its government business, and that combined line was $165 million for the June quarter and $353 million for the first nine months of fiscal 2026. Management's targets — approximately $5 billion in fiscal 2027 and more than $15 billion in fiscal 2029 — are for the Data Center portion alone. Nobody outside the company can split them, and this piece will not pretend to.

The $15 billion is not a stray number either. It is one leg of the $40 billion of non-handset revenue by fiscal 2029 that Cristiano Amon set out at the July print, alongside $24 billion of automotive and IoT — a target that nearly doubled the one he gave in November 2024. Data centre is the leg with nothing underneath it yet.

Our Qualcomm model has carried both targets as the central question since it was published on August 27, and it deliberately lands below both. Its base case projects $3,772 million of combined data-centre-and-other revenue in fiscal 2027 and $10,352 million in fiscal 2029. That is 24.6% under the $5 billion and 31.0% under the $15 billion — and because our line still includes the government business while management's targets do not, both gaps are floors.

The model was not caught out by the announcement. It already carries a +300% level step landing in the December 2026 quarter, written for "the two custom-silicon wins management says are revenue-generating in the December quarter." On September 8 one of those two was named. Palkhiwala put the fiscal 2027 number at "very high confidence" — "We have POs, we're building the chips" — said revenue with Amazon starts in the December quarter, and said the second, unnamed global hyperscaler is "similarly proceeding." The $5 billion is a company target across all data-centre customers, not an Amazon figure, and he did not present it as one.

So the warrant does not answer the model's question. It answers a smaller one: the December step is real and dated. What the model wants to know is the level.

Here is what closing the gap is worth. These are our figures, generated by moving one assumption in our own model and leaving everything else where it was published:

Three things fall out of that table.

The data-centre line is already 23% of our fair value. Deleting it costs $38.85 a share of the $168.59 base — from a business that printed $165 million last quarter. Anyone who thinks the model is sceptical of the story should note how much of the valuation is sitting on it.

Taking management at its word on fiscal 2027 is worth $12.67 a share. Not nothing, and not the re-rating the headlines implied. Believing both dated targets is worth $19.50, or 11.6%.

The market took 43% of the fiscal-2027 move on the day. Qualcomm closed at $174.09 on September 8, up 3.17% from the September 4 close of $168.74, having opened at $180.32 and touched $183.49 before giving back more than half the move on three times the previous session's volume. The close sits $5.50 above our base case, against the $12.67 that fully believing the fiscal 2027 target would be worth. The market did not price the announcement as proof; it priced it as evidence.

And the warrant's own cost, at four cents in the dollar, is around 17% of the $1,228 million gap our base case already carries into fiscal 2027 — assuming, generously, that every dollar of a $5 billion fiscal 2027 came from Amazon. The accounting for this deal is not what moves the number. The orders are.

The model does not change, and the size of the no is the point

Nothing in the filing is a revenue disclosure. It is a ceiling, a vesting mechanic and a strike price. Our base case stays $3,772 million for fiscal 2027 because the thing that would move it — how much Amazon actually orders — is precisely what the document declines to say, and what the tranche schedule, once filed, may still not say in dollars.

What changed is the quality of the evidence behind the step we already carry. Before September 8, the December quarter's +300% rested on management saying two customers would begin generating revenue. Now one of them is named, is under a decade-long equity incentive, has placed purchase orders on the CFO's account, and has committed enough for Qualcomm to release 3,750,000 shares against it. That is a materially better-evidenced assumption at the same level. It is not a higher level.

The mechanism is worth stating plainly, because it is the reason these structures keep appearing. A customer warrant converts a hyperscaler's discretionary spend into the supplier's contracted equity, priced today. Amazon owes Qualcomm nothing. If it orders nothing, it earns nothing beyond the 15% already vested and Qualcomm has given away 0.35% of itself. If it orders $60 billion, it earns the right to buy 2.34% of Qualcomm at a price fixed in September 2026 — and the further Qualcomm's data-centre business carries the stock, the more that right is worth. The supplier is paying for volume in an option on its own success. Amazon's side of it is immaterial at this size: $320.8 million of intrinsic value against a company that booked $200.6 billion of revenue in the June quarter alone.

What to watch

1. The warrant exhibit and the resale prospectus supplement. Neither had been filed as of the evening of September 8. They carry the tranche sizes, the definition of a qualifying payment, any change-of-control acceleration and any ownership cap. Until they land, every statement about what $60 billion of purchases converts into is arithmetic on a straight line nobody has confirmed is straight.
2. Qualcomm's grant-date fair value for the warrant, and its accounting treatment, in the annual report for a fiscal year that ends this month. If it follows Marvell and runs as a reduction to revenue, then the data-centre line every target is quoted on will be reported net of it, and the $5 billion needs to be read as gross or net — a distinction nobody has yet drawn.
3. The December quarter itself. Management has dated the first Amazon revenue to it, and Qualcomm has reported that quarter in late January or early February in each of the last three years. It is the first time the +300% step in our model meets a reported number.
4. The dollar size of the initial purchase commitments. It is the single figure that would turn this from a bounded story into a priced one, and neither party has disclosed it.
5. The second hyperscaler. Palkhiwala says it is "similarly proceeding." A second warrant on these terms would make this a financing convention rather than a pair of deals, which is a much larger story than either ticker.

Every warrant term here is quoted from Qualcomm's current report filed September 8, 2026. Its $165 million nonreportable segment, $353 million nine-month figure and 1,069 million diluted shares are as reported for the quarter ended June 28, 2026, captured in our June-quarter notes. Marvell's customer-warrant terms, grant-date fair values and revenue treatment are disclosed in its quarterly report for the period ended August 1, 2026. Akash Palkhiwala's remarks are press-reported from transcripts of a Goldman Sachs conference appearance on September 8, 2026, and Qualcomm has published no transcript of its own. Every aggregate, percentage, ratio and intrinsic value is our arithmetic on those disclosures; the $2,400 per share is an inference rather than a disclosure, because the tranche schedule is unfiled, and applying Marvell's 60–62% ratio to Qualcomm's strike is ours. Fair values and fiscal-year revenue figures come from our model as published on August 27, 2026. Prices are market closes on the dates named.