Qualcomm (QCOM.O) saw its stocks surge approximately 10%, reaching a peak not witnessed in over two years on Thursday, following indications from the chipmaker, which focuses on smartphones, suggesting a resurgence in demand propelled by Artificial Intelligence, notably in China, after enduring a prolonged downturn.
In the initial half of its fiscal year, sales to Chinese smartphone manufacturers escalated by 40%, the company disclosed on Wednesday, as consumers in the region increasingly favor pricier devices equipped to handle AI-powered chatbots.
IDC analyst Nabila Popal remarked, "Chinese manufacturers, who previously leaned heavily on MediaTek, are poised to adopt Qualcomm's premium chips more prominently as they intensify their AI initiatives."
Popal added, "This trend offers an upside for Qualcomm as a significant portion of the market recovery is expected to be driven by Chinese OEMs this year, after enduring challenging conditions over the past couple of years."
Forecasting third-quarter sales exceeding expectations, Qualcomm also anticipates benefiting from its IoT and automotive segments.
As the foremost supplier of smartphone chips, Qualcomm could see its market value soar by over $18 billion if the current gains persist throughout the trading session.
The Philadelphia Semiconductor index (.SOX) rebounded by 1.4%, following a 3.5% decline on Wednesday due to disappointing performances from chip firms Advanced Micro Devices (AMD.O) and Super Micro Computer (SMCI.O).
Preliminary data from research firm IDC reveals that in the high-end segment, the integration of AI and the introduction of foldable products enabled Android smartphone vendors to distinguish themselves further from Apple (AAPL.O) and attract greater attention from Chinese consumers in the first quarter of 2024.
Analysts at Wolfe Research expressed optimism, stating, "We believe there is potential for further growth, especially considering last year's subdued Android cycle and the anticipated enhancement in IoT as inventory levels stabilize."
According to LSEG data, at least 14 analysts revised their price targets upwards for Qualcomm.
Early trading saw Qualcomm's shares climb by 9.7% to $180.31, poised to augment the 13.5% increase recorded so far this year.
Meanwhile, Apple's shares, scheduled to release earnings after the market closes on Thursday, rose by 1.2%.
