Qualcomm’s (NASDAQ:QCOM) stock surged by approximately 10% to reach a more than two-year high on Thursday, driven by indications of an AI-driven resurgence in demand, particularly in China, following a prolonged period of decline.
The smartphone-focused chipmaker reported a 40% increase in sales to Chinese smartphone manufacturers in the first half of its fiscal year, attributing the growth to the rising preference among consumers for higher-priced devices equipped with AI chatbot capabilities.
Nabila Popal, an analyst at IDC, highlighted the shift among Chinese vendors towards Qualcomm’s high-end chips, traditionally dominated by MediaTek. Popal emphasized that this trend presents significant upside potential for Qualcomm, particularly as Chinese OEMs lead the recovery in the smartphone market after facing challenges in recent years.
Qualcomm’s optimistic outlook extended to its projected third-quarter sales, which surpassed analyst estimates, driven by smartphone sales and growth in its IoT (Internet of Things) and auto segments.
As the leading supplier of smartphone chips, the company stood to gain more than $18 billion in market value if the upward momentum persisted.
The positive sentiment surrounding Qualcomm contrasted with the previous day’s downturn in the Philadelphia Semiconductor index, which experienced a 3.5% drop following disappointing results from chip manufacturers Advanced Micro Devices and Super Micro Computer.
Preliminary data from IDC suggested that in the high-end smartphone segment, the integration of AI technologies and the introduction of foldable products allowed Android smartphone vendors to differentiate themselves from Apple and attract increased interest from Chinese consumers in the first quarter of 2024.
Analysts at Wolfe Research expressed optimism regarding Qualcomm’s future performance, anticipating further growth driven by the normalization of inventory levels in the IoT sector and the potential for an uptick in the Android cycle.
A total of 14 analysts raised their price targets on Qualcomm, according to data from LSEG.
Qualcomm’s shares surged by 9.7% to $180.31 in early trading, building on the 13.5% gain recorded since the beginning of the year. Meanwhile, shares of Apple, set to announce earnings after the market closes on Thursday, saw a modest increase of 1.2%.
Featured Image: Unsplash
