Qualcomm's stock pop shows investors are 'waking up' to boom in AI devices

Qualcomm's shares experienced a remarkable surge of 12% on Friday, marking a staggering 75% increase over the past month. This significant uptick reflects Wall Street's growing recognition of the chipmaker's pivotal role in the burgeoning AI device market. Currently, Qualcomm's stock is trading at historic highs. Despite facing stiff competition from industry giants like Nvidia in the race for AI-capable chips, Qualcomm is leveraging its stronghold in the smartphone sector to establish itself as an essential player in the realm of connected devices, ranging from smart glasses to vehicles and robotics. Recent reports indicate that Qualcomm is collaborating with OpenAI to develop a cutting-edge AI chip intended for an upcoming device powered by AI agents. "This company is on the path to reclaiming its former glory and is set to spearhead the connected device revolution," stated Ivan Feinseth, an analyst at Tigress Financial Partners, who has a positive outlook on Qualcomm stocks. He believes that investors are beginning to recognize this potential. Feinseth also expressed optimism about Qualcomm's joint efforts with OpenAI, describing an anticipated device as a revolutionary phone equipped with an AI-based operating system capable of performing a wide range of tasks. Qualcomm is integral to numerous gadgets that employ AI at the edge rather than relying on cloud computing. This includes devices such as Microsoft's Surface PCs and smart glasses produced by Google and Meta. The company's Arm-based chips present an energy-efficient alternative to those manufactured by leading central processor firms like Intel and AMD. In a recent announcement, Qualcomm revealed a partnership with automaker Stellantis, which plans to utilize Qualcomm's Snapdragon processors to enhance computing capabilities across its vehicles, including cockpit systems, connectivity solutions, and advanced driver assistance technologies. Stellantis boasts a diverse lineup of brands, including Alfa Romeo, Chrysler, and Jeep. Ned Curic, Stellantis' head of product development, emphasized that customers will benefit from a seamless and safe auto-driving experience, adaptable to various driving conditions. Qualcomm has also formed partnerships with Bosch, Volkswagen, Hyundai, and BMW. The company's latest earnings report highlighted a 38% increase in revenue in its automotive sector, reaching $1.3 billion. Currently, over 1 million vehicles are operating with autonomous systems powered by Qualcomm processors. The recent spike in Qualcomm's stock is further fueled by investor enthusiasm for a new business segment focused on data center chips. Introduced last year, Qualcomm's upcoming AI200 and AI250 represent custom AI accelerators, designed to be more programmable than the graphics processing units that have dominated AI tasks so far. These chips are set to launch later this year, offered as part of a comprehensive rack-scale system akin to Nvidia's Vera Rubin and AMD's forthcoming Helios system. Qualcomm's CEO, Cristiano Amon, revealed during an April earnings call that the company plans to deliver data center chips to a major hyperscaler within the year. Investors can anticipate more details during Amon's keynote at the Computex conference in Taiwan on June 2 and at Qualcomm's investor day on June 24.