Qualcomm Jumps to All-Time High on Hyperscaler AI Pact and Record Auto Revenue, But Handset Woes Linger

Qualcomm shares closed at a fresh all-time high on Friday, surging nearly 12% to €205.35 as investors cheered a strategic pivot that is rapidly transforming the company from a smartphone component supplier into a broad AI infrastructure player. The rally marked the stock’s best single-day performance in months and pushed the year-to-date gain to around 39%.

At the heart of the excitement is a newly confirmed partnership with an unnamed hyperscaler cloud provider. Chief Executive Cristiano Amon described the collaboration as “multigenerational” and said first deliveries of custom silicon solutions will begin in the December quarter. Qualcomm is not aiming to challenge Nvidia head-on in GPU training workloads; instead, its strategy centers on inference-optimized ASICs that consume less power than traditional GPU-heavy alternatives. The company is developing three chip categories: central processing units, inference accelerators, and customer-specific ASICs. The recent acquisition of Alphawave IP Group has substantially bolstered its intellectual property portfolio for these efforts.

The hyperscaler win is complemented by internal chip developments. Qualcomm’s new AI accelerators, the AI200 and AI250, are slated for release later this year and promise 768 gigabytes of on-board memory with lower power draw than rivals. Amon has already flagged an initial shipment to a major cloud operator. Separately, reports have surfaced that the company held talks with AI startup Tenstorrent, which is reviewing strategic options and could be valued at over $5 billion in any transaction. Qualcomm is also reportedly collaborating with OpenAI on a custom chip for AI agents.

While the data center narrative captured the market’s imagination, Qualcomm’s automotive business delivered the strongest operational showing. Second-quarter automotive revenue hit a record $1.33 billion, up 38% year-over-year. More than one million vehicles now use Qualcomm’s autonomous driving systems, and partnerships with Bosch, Volkswagen, and BMW continue to deepen. Management expects the automotive segment to reach a run rate of over $6 billion by fiscal 2026. The IoT division also contributed, growing 9% during the quarter.

Should investors sell immediately? Or is it worth buying Qualcomm?

The broader earnings picture bolstered confidence. Total revenue came in at $10.6 billion, while adjusted earnings per share of $2.65 exceeded consensus estimates. Several Wall Street firms rushed to adjust their valuations. Daiwa upgraded the stock from Neutral to Outperform with a $225 price target, up from $140. Tigress Financial reiterated a buy rating and lifted its target to $280, also highlighting a $20 billion share repurchase program. Melius Research raised its target to $220. Yet not all analysts are convinced: Barclays maintains a Sell rating and a $150 target, and the consensus remains cautious — 22 analysts recommend a hold, with only 11 advising a buy.

Bears point to significant headwinds in Qualcomm’s core business. Handset revenue declined 13% in the second quarter, partly due to memory shortages among Chinese manufacturers. The company continues to lose share at Apple, and the broader Android market is softening. Competition from MediaTek, which is adding new AI features to its smartphone chips, only intensifies the pressure. Moreover, Qualcomm faces the risk that Apple will eventually bring its modem development fully in-house.

The near-term outlook also gives reason for pause. Qualcomm guided for third-quarter revenue of roughly $9.6 billion, about 7% below the prior-year period and below analyst forecasts. Operating income for the second quarter fell 26% compared with last year. The guidance underscores how urgently the company needs to diversify away from handsets.

Qualcomm at a turning point? This analysis reveals what investors need to know now.

Management will have an opportunity to flesh out its data-center strategy at the Computex trade show in Taipei in early June, where Amon is scheduled to deliver a keynote. The real test, however, comes at the investor day later that month, when Qualcomm is expected to provide concrete revenue targets for the cloud business, a credible product roadmap, and answers to whether the current valuation is backed by fundamentals or inflated expectations.

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