Thursday’s premarket action saw a 4% increase in Qualcomm (QCOM.O) shares as the chipmaker specializing in smartphones hinted at an AI-driven uptick in demand, particularly in China, following a two-year decline.
The company reported on Wednesday that sales to Chinese smartphone manufacturers increased 40% in the first half of its fiscal year as consumers in that country tended to purchase more expensive gadgets with AI chatbots built in.
“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,” Nabila Popal, an analyst with IDC, said.
“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 predicted above-average third-quarter revenue on Wednesday, citing the benefits of its Internet of Things (IoT) and automotive divisions.
Based on premarket movements, the company—the largest supplier of semiconductors for smartphones—was expected to increase its market value by more than $8 billion. Other semiconductor companies had increases of 2.8% and 2.4%, respectively, including Arm and Broadcom (AVGO.O).
Based on initial data from research firm IDC, Chinese customers showed more interest in Android smartphone suppliers in the first quarter of 2024 due to the AI buzz and foldable goods, which helped them set themselves apart from Apple (AAPL.O) in the high-end market.
Given the subdued Android cycle from the previous year and the possibility of IoT (internet of things) improvement when inventory normalizes, we’re confident that numbers can be driven higher,” analysts at Wolfe Research stated.
Based on LSEG data, at least 14 analysts increased their price targets for Qualcomm.
The stock of Qualcomm has increased 13.5% this year after rising 31.5% in 2023.
Apple’s stock was up 1.05% in premarket trade on Thursday. The company is scheduled to release its earnings report after the market closes.
