(WS News) – Qualcomm’s (QCOM.O) shares rose more than 8% on Thursday after the company forecast first-quarter results ahead of Wall Street estimates as the chip designer benefits from a recovery in the smartphone market and the launch of new Chinese handsets.
The company said it expects sales and adjusted profit for the first quarter – which will cover the holiday shopping season in the U.S. and European markets – with a midpoint of $10.90 billion and $2.95 per share.
The average analyst estimates were $10.59 billion and $2.86 per share, according to data compiled by LSEG.
Nvidia (NVDA.O) and Intel (INTC.O) were marginally higher in trading before the bell on Thursday.
“We’re encouraged by … what appears to be a stabilized handset backdrop and ongoing diversification outside of handsets,” TD Cowen analysts said.
While Qualcomm has a deal to keep selling chips to Apple until at least 2026, focus is on whether Qualcomm’s efforts to break into laptops and artificial intelligence in data centers will ramp up quickly enough to offset declines in Apple revenue.
Qualcomm is benefiting from a recovery in smartphone markets as consumers upgrade devices for AI applications such as chatbots and image generators.
The company’s handset business got a boost in the fourth quarter from new smartphone launches in China, with Qualcomm getting 46% of its revenue in its most recent fiscal year from customers with headquarters in the country.
As of Wednesday’s close, Qualcomm’s shares have risen 19.6% this year. Nvidia’s shares have nearly tripled in the same period, while Intel’s stock has slumped 50.2%.
