Qualcomm shares rise as its forecast beats estimates

• Benefiting from a boom in the launch of flagship smartphones in China, Qualcomm’s revenue forecast exceeds estimates
• Its shares rose 8.5 percent in after-hours trading

What happened

Chip designer Qualcomm forecasted on Wednesday that sales and profit for the current quarter would top Wall Street’s expectations, sending its shares up 8.5 percent in after-hours trading. This boost is due to the company benefiting from a surge in flagship smartphone launches in China.

Qualcomm said it expects median sales of $10.9 billion and adjusted profit of $2.95 per share for its fiscal first quarter. It includes the holiday shopping season in the U.S. and European markets. According to the London Stock Exchange, Wall Street expected sales and adjusted profit of $10.59 billion and $2.86 per share, respectively. Sales and adjusted profit for the fiscal fourth quarter, ending Sept. 29, were $10.24 billion and $2.69 per share, surpassing analysts’ expectations of $9.9 billion and $2.56 per share.

As consumers increasingly upgrade their smartphones to support advanced AI applications, such as chatbots and image generators, Qualcomm’s shares have risen. Qualcomm’s Snapdragon processors power many AI and 5G-enabled devices, and demand is increasing as manufacturers cater to this shift.

Also read: Qualcomm Beats Quarterly Estimates, Guides Higher. Stock Jumps.

Also read: Qualcomm beats Q4 estimates, announces $15B in share buybacks

What it’s important

As demand for AI-enabled devices continues to expand across industries, tech companies are increasingly aligning their products with consumer expectations for AI capabilities. Smaller companies, such as Marvell Technology, which focuses on data infrastructure and AI-driven cloud services, are also seizing growth opportunities.

The surge in demand for AI devices has broader implications for the industry. Especially as Apple continues to develop in-house modem chips. This shift reflects a larger trend in tech. The major companies, including Google and Samsung, are working to become self-reliant in chip development to optimize costs and gain greater control over technology.

For smaller companies, this trend could lead to increased competition or potential partnership opportunities. For example, smaller companies like MediaTek, a Taiwanese chip manufacturer known for its affordable, high-performance processors, have recognized similar market risks. MediaTek has successfully partnered with brands seeking high-end chip alternatives as well as low-cost smartphone models. By catering to different market segments, MediaTek has become a strong competitor in the mid-tier market. This demonstrates that flexibility and cost-effective solutions can create a competitive advantage.