Qualcomm (QCOM) shares surged more than 10% in premarket trading Monday after a report from TF International Securities analyst Ming-Chi Kuo indicated that OpenAI is working with Qualcomm and MediaTek on smartphone processors. The move comes just ahead of Qualcomm's fiscal second-quarter earnings report, scheduled for release after the market closes on April 29.
OpenAI Partnership Still Unconfirmed
According to Kuo's research note, which cites industry sources, OpenAI has partnered with Qualcomm and MediaTek to develop smartphone chips, with Luxshare taking on co-design and manufacturing responsibilities. However, neither Qualcomm nor OpenAI has confirmed the report, and mass production is not expected until 2028 at the earliest. This timeline suggests that the immediate impact on Qualcomm's revenue will be minimal, but the news has reignited investor interest in the company's role in the AI hardware ecosystem.
Earnings on Deck
Qualcomm's upcoming earnings report is a critical catalyst for the stock. The company has guided for fiscal second-quarter revenue between $10.2 billion and $11.0 billion, below Wall Street expectations. In February, CEO Cristiano Amon highlighted a global memory-chip crunch that is squeezing smartphone demand, telling Reuters, "I just wish we had more memory." The earnings call, scheduled for 1:45 p.m. Pacific on April 29, will provide investors with an opportunity to assess the company's handset business, automotive chip sales, and margin trends against the backdrop of the OpenAI headlines.
Market Context and Competitor Moves
The broader market opened the week on a flat note, with index futures little changed and oil prices ticking higher. Traders are focused on upcoming Big Tech earnings and the Federal Reserve's policy decision. In this environment, Qualcomm's AI-related news has captured outsized attention. MediaTek also rose in early trading, while Intel (INTC) added 2.7%, building on a 23.6% surge from the prior session following its own earnings bounce. Apple remains a significant overhang for Qualcomm, as it is both a major customer and a competitor in custom silicon, while Samsung's chip ambitions add further pressure.
Long-Term AI Bet
Kuo's report suggests that AI-enabled phones could accelerate consumer upgrade cycles, potentially creating a new growth segment for Qualcomm. The company's Snapdragon platform is well-positioned to handle AI processing on-device, which could reduce reliance on cloud computing. However, with mass production not expected until 2028, the current stock move appears to be a long-term bet on Qualcomm's AI hardware prospects rather than a near-term earnings catalyst.
Shareholder Returns and Diversification
Qualcomm has been actively returning capital to shareholders. In March, the company announced a $20 billion stock buyback program and increased its quarterly dividend to $0.92 per share. CEO Cristiano Amon stated that the goal is to drive stockholder returns while pursuing diversification opportunities beyond smartphones, including automotive, IoT, and AI.
Risk Factors
Despite the positive sentiment, risks remain. The OpenAI collaboration is unconfirmed and years away from production. If Qualcomm's earnings reveal further weakness in handset demand, tighter margins, or sluggish progress in diversification, the premarket gains could quickly evaporate. William Blair macro analyst Richard de Chazal noted that equity markets are "back on the AI technology trade," but commodity markets are reacting differently to geopolitical risks, particularly around Iran.
