Qualcomm shares soar 16% on CEO comments about China orders, hyperscaler customer

Qualcomm's shares experienced a notable rebound following remarks from CEO Cristiano Amon during the earnings call on Wednesday. He announced that the company is set to commence shipments of data center chips to a significant hyperscaler within the current calendar year. This news came on the heels of a mixed financial report, which initially saw the stock dip by as much as 7% after the company revealed second-quarter earnings that exceeded Wall Street's expectations, yet fell short on future guidance. While Amon refrained from naming the customer, he teased that further details would be unveiled during Qualcomm's investor day scheduled for June. Despite trailing behind industry leaders like Nvidia in the competitive arena of artificial intelligence chip production, Qualcomm introduced its own data center chips last year. Adding to the excitement, OpenAI recently partnered with Qualcomm to create an AI chip designed for smartphones, potentially powering an upcoming device operated by AI agents. "We are witnessing a transformative era in the industry — the emergence of AI agents is significantly influencing our development trajectory across all platforms," Amon stated during the earnings call. Qualcomm reported adjusted earnings per share of $2.65, which surpassed estimates by nine cents. However, its revenue of $10.6 billion aligned with expectations, while the forecast for third-quarter revenue fell short, anticipated to be between $9.2 billion and $10 billion, below the $10.19 billion projected by StreetAccount analysts. The International Data Corporation has reported a decline of over 4% in global smartphone shipments, ending a rising trend that had persisted since mid-2023. Regarding sales in China, Amon indicated during a CNBC call that the current quarter is expected to be the lowest point, attributing this to customers depleting their inventory. A significant portion of Qualcomm's revenue is derived from licensing fees for its foundational technology which is integral to nearly every smartphone. Amon emphasized to CNBC that this segment of the business provides clarity on market activity. Qualcomm specializes in designing chips and wireless technologies for a variety of devices, earning recognition for its Snapdragon processors that power Android smartphones and its modem technology that facilitates mobile connectivity, including 5G.