(Reuters) – Qualcomm (NASDAQ:) shares rose about 10% to a more than two-year high on Thursday after the smartphone chip maker signaled a recovery in demand for AI, especially in China, after years of decline.
Sales to Chinese smartphone makers jumped 40% in the first half of the fiscal year, the company said on Wednesday, as buyers there gravitate toward more expensive devices that can support artificial intelligence chatbots.
“Chinese vendors, which have traditionally relied more on MediaTek, are set to increase their use of Qualcomm’s high-end chips as they push ahead in artificial intelligence,” said IDC analyst Nabila Popal.
“They also represent upside potential for Qualcomm, as much of the recovery this year will also be driven by Chinese OEMs, given the difficult past two years.”
Qualcomm on Wednesday forecast third-quarter sales to beat forecasts as the company also benefits from its IoT (Internet of Things) and automotive segments.
The company, the largest supplier of smartphone chips, was on track to add more than $18 billion to its market value if gains continue through the session.
The Philadelphia Semiconductor Index rose 1.4% after falling 3.5% on Wednesday amid dismal results from chip makers Advanced Micro Devices (NASDAQ:) and Super Micro Computer (NASDAQ:).
In the high-end segment, excitement around artificial intelligence and foldable products allowed Android smartphone makers to further differentiate themselves from Apple (NASDAQ:) and sparked increased interest from Chinese consumers in the first quarter of 2019, according to preliminary data from research firm IDC. 2024.
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“We are optimistic that the numbers could rise given the muted Android cycle last year and the likelihood of IoT (Internet of Things) improvements as inventories normalize,” Wolfe Research analysts said.
At least 14 analysts raised their price targets for Qualcomm, according to LSEG.
Qualcomm shares rose 9.7% to $180.31 in early trading, which should extend gains of 13.5% this year.
Shares of Apple, which is set to report earnings after Thursday’s market close, rose 1.2%.