Qualcomm’s stock pop shows investors ‘waking up’ to boom in AI devices

Qualcomm shares rose 12 percent on Friday and have surged 75 percent in the past month as the chipmaker’s increasingly central position in the physical AI boom becomes more apparent to Wall Street. The stock is trading at record levels.

Although Qualcomm has fallen behind giants like Nvidia in the race for chips to power AI models and workloads, the company is using its dominance in smartphones to strengthen its role as a major player in connected devices such as glasses, cars or robots.

OpenAI is also reportedly partnering with Qualcomm to develop an AI chip that could power a future device that will be run by AI agents.

“This company will return to its former glory and lead the connected device revolution,” said Tigress Financial Partners analyst Ivan Feinseth, who considers Qualcomm a buy. Investors “are waking up to that fact,” he said.

Regarding Qualcomm’s work with OpenAI, Feinseth said he was optimistic about the upcoming device, calling it “a phone that will have an AI-based operating system that will do everything.”

Qualcomm is building the foundation for a host of devices that perform AI at the edge rather than in the cloud. This includes Microsoft’s Surface PCs and smart glasses Google and Meta. His Armbased chips, central processor leaders Intel and Advanced Micro Devices.

Qualcomm on Thursday announced a deal with the automaker StellantisWhich in question It will use the chipmaker’s Snapdragon processors to “support advanced, unified computing power across the entire vehicle, including the cockpit, connectivity and advanced driver assistance systems.”

Stellantis has a wide portfolio of brands, including Alfa Romeo, Chrysler, Dodge, Fiat, Jeep and Maserati.

“Customers will be able to enjoy a seamless, immersive and safe automated driving experience on urban and highway roads with multiple driving modes to choose from,” Ned Curic, Stellantis’ head of product development, said at the company’s investor day on Thursday.

Qualcomm made similar agreements with Bosch. volkswagenHyundai and BMW. In its latest earnings report, Qualcomm said revenue in its automotive business rose 38% from a year earlier to $1.3 billion. According to the company, more than 1 million cars currently run their autonomous systems on Qualcomm processors.

Friday’s stock rally is also tied to investor excitement around data center chips, an entirely new business segment for Qualcomm.

Announced last year, Qualcomm’s upcoming AI200 and AI250s are dedicated AI accelerators; It’s a more programmable type of chip than Nvidia’s graphics processing units, which have dominated AI workloads so far. The chips are expected to go on sale later this year; It’s available in a full rack-scale system similar to Nvidia’s Vera Rubin and AMD’s upcoming Helios system.

Qualcomm CEO Cristiano Amon said on the company’s April earnings call that it would begin shipping data center chips to a “major hyperscaler” within the calendar year. Investors will be able to hear more when Amon keynotes the Computex conference in Taiwan on June 2 and Qualcomm’s investor day on June 24.

—CNBC’s Kristina Partsinevelos contributed to this report

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