Qualcomm shares surged approximately 6% in early trading on Friday, extending a recent rally fueled by growing investor enthusiasm for artificial intelligence applications in smartphones, vehicles, and data centers. The latest boost came after Daiwa Securities upgraded the chipmaker's stock to Outperform from Neutral and raised its price target to $225.
Analyst Upgrade and Market Context
Daiwa analyst Louis Miscioscia pointed to strong revenue growth drivers and described Qualcomm's valuation as modest, according to Investing.com. The upgrade adds momentum to a stock that has been one of the stronger performers in the U.S. semiconductor sector, as investors appear willing to look past near-term headwinds and focus on long-term AI opportunities.
The broader chip sector also showed signs of stabilization, with Nvidia and Microchip Technology both trading higher. Qualcomm shares jumped 4.8% before the bell, Reuters reported, as semiconductor stocks found their footing after recent volatility.
Fiscal Q2 Results and Key Metrics
Last week, Qualcomm reported fiscal second-quarter revenue of $10.6 billion and non-GAAP earnings of $2.65 per share. Automotive revenue reached an all-time quarterly high, and combined automotive and Internet of Things revenue climbed 20% year-over-year. These results underscore the company's progress in diversifying beyond its traditional handset chip business.
CEO Cristiano Amon acknowledged the current memory market is challenging but emphasized that AI agents are reshaping the company's direction. He also confirmed that Qualcomm's first data-center chip shipment to a major hyperscaler customer is scheduled before year-end.
Strategic Moves and Competition
In March, Qualcomm's board approved a fresh $20 billion share buyback program and raised the quarterly dividend to 92 cents from 89 cents per share, signaling confidence in its long-term prospects. However, competition remains fierce. Arm highlighted ongoing weakness in the smartphone market this week, while Nvidia continues to set the benchmark for AI chip performance. MediaTek is reportedly involved in projects related to OpenAI smartphone processors.
Risks and Market Outlook
Despite the upbeat sentiment, risks persist. Qualcomm's third-quarter guidance disappointed investors last week, and a prolonged smartphone downturn, memory shortages, or weaker data-center demand could undermine its diversification strategy. Barclays strategist Emmanuel Cau cautioned that the semiconductor rally appears "starting to look extended," and further gains may depend on easing geopolitical tensions and stable oil flows.
Investors will be watching closely to see if Qualcomm can sustain its momentum and deliver on its AI ambitions amid a challenging macroeconomic environment.
