Qualcomm jumps as AI sparks rebound in Chinese smartphone market
02/05/2024 12:23
May 2 (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
ARM.O 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.
"We're optimistic that numbers can be driven higher, given
last year's muted Android cycle and the likelihood of
IoT(internet of things) improvement as inventory normalizes,"
analysts at Wolfe Research said.
At least 14 analysts raised their price targets on Qualcomm,
according to LSEG data.
Qualcomm's shares have gained 13.5% this year following a
31.5% rise in 2023.
Shares of Apple, which is set to report earnings after
market closes on Thursday, were up 1.05% in premarket trading.
(Reporting by Harshita Mary Varghese; Editing by Sriraj
Kalluvila)
((HarshitaMary.Varghese@thomsonreuters.com;))