(Reuters) – Qualcomm (QCOM.O) shares rose 4% in premarket trading on Thursday after the smartphone-focused chipmaker signaled an AI-fueled rebound in demand, especially in China, after a two-year slump.
Sales to Chinese smartphone makers jumped 40% in the first half of its fiscal year, the company said on Wednesday, as buyers there gravitate toward higher-priced devices that can accommodate AI chatbots.
“Chinese vendors who traditionally relied more on MediaTek, are going to start leveraging Qualcomm’s high-end chips more as they push hard into the AI Agenda,” said IDC analyst Nabila Popal.
“They further represent an upside for Qualcomm because majority of the recovery is also going to be driven by Chinese OEMs this year, coming from a tough last two years.”
Qualcomm on Wednesday projected third-quarter sales that were above estimates as it also benefits from its IoT (Internet of things) and auto segments.
The company, the biggest supplier of smartphone chips, was on course to add more than $8 billion to its market value based on premarket movements. Other semiconductor firms such as Arm and Broadcom (AVGO.O) rose 2.8% and 2.4%, respectively.
According to preliminary data from research firm IDC, in the high-end segment, the AI buzz and the foldable products allowed the Android smartphone vendors to further differentiate themselves from Apple (AAPL.O) and garnered increased interest from Chinese consumers in the first quarter of 2024.
At least 14 analysts raised their price targets on Qualcomm, according to LSEG data.
By embracing AI-driven solutions, Qualcomm has not only regained momentum in the Chinese smartphone market but has also solidified its position as a leading player in the global tech landscape.
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