Qualcomm shares climbed more than 13% after investors responded positively to CEO Cristiano Amon’s confidence in a coming rebound for the smartphone market and the company’s aggressive push into AI and data center chips. Despite issuing a weak third-quarter forecast, Qualcomm’s broader growth narrative centered on diversification beyond traditional smartphone dependency helped restore investor confidence.

The company, historically reliant on handset chip sales, is expanding into high-growth sectors including data center processors, AI accelerators, ASIC chips, and autonomous vehicle technology. Qualcomm plans to begin shipping data center products before year-end, signaling a major strategic shift as smartphone manufacturers face rising memory prices and weaker consumer demand.

Qualcomm’s long-term challenge remains Apple’s move toward in-house modem chips, which could reduce Qualcomm’s component share after their licensing agreement ends in 2027. Analysts note this creates pressure on Qualcomm’s smartphone business, especially as Apple and Samsung dominate premium markets.

Still, investor sentiment improved as Qualcomm’s AI ambitions and broader semiconductor strategy overshadowed concerns about near-term smartphone weakness. Reports linking Qualcomm and MediaTek to an OpenAI-focused AI smartphone project further fueled optimism. Following earnings, at least 14 brokerages raised their price targets, reflecting confidence that Qualcomm’s transition into AI infrastructure and enterprise chips could offset future handset risks.