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Qualcomm Shares Surge on AI and Smartphone Recovery Outlook

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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.

Smartphone Market Faces Decline

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Global smartphone shipments are expected to fall sharply in 2026, reaching their lowest level in more than a decade.

Rising memory chip costs are driving up production expenses, forcing manufacturers to reconsider pricing strategies and product positioning.

Lower-cost device makers are likely to be most affected as supply pressures reshape the competitive landscape.

Premium brands may benefit from the shift, with stronger financial resources allowing them to absorb cost increases more effectively.

The development reflects how expanding demand for advanced computing infrastructure is influencing consumer electronics markets.

Industry forecasts suggest a gradual recovery in the following years, though structural changes may persist.

Qualcomm’s Strong Forecast Overshadowed by Expected Samsung Loss

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Qualcomm projected stronger-than-expected quarterly sales and profit on Wednesday, buoyed by a rebound in premium smartphone demand, but its stock slipped in after-hours trading amid concerns over a potential loss of business from Samsung next year.

For the quarter ending in December, the chip designer forecast revenue and adjusted earnings at midpoints of $12.2 billion and $3.40 per share, beating analyst expectations of $11.62 billion and $3.31, according to LSEG data.

However, CEO Cristiano Amon said the company expects to supply about 75% of the modem chips for Samsung’s upcoming Galaxy S26 lineup — down from 100% for the current Galaxy S25 models. The announcement sent Qualcomm shares down 2.7% in extended trading after a 4% rise earlier in the day.

Despite the setback, Amon emphasized that Qualcomm is diversifying beyond smartphones into automotive, laptop, and data center chips, as longtime client Apple moves toward producing its own modems.

He also revealed that Qualcomm is in discussions with a “large hyperscaler” — an AI-focused computing company — following its recent deal with Humain, an AI firm backed by Saudi Arabia’s sovereign wealth fund.

The company’s fiscal fourth-quarter results also outperformed expectations, with $11.27 billion in sales and $3 per share in adjusted profit, compared to estimates of $10.79 billion and $2.88.

Amon said the forecast reflects a surge in demand for high-end smartphones capable of running AI applications, especially in markets like China and India, where consumers are “upgrading from mid-range to premium.”