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Qualcomm’s smartphone future looks brighter with AI

Livemint · 6m

Investors are optimistic about the possibility of an AI-enabled iPhone following Apple's latest earnings report. Although iPhone revenue was weak, Apple's focus on generative artificial intelligence has analysts predicting a potential AI-driven iPhone supercycle in 2025. This news has boosted Apple's shares by 6%. Meanwhile, Qualcomm, the maker of modem chips used in iPhones and other devices, saw a nearly 10% jump in its stock following strong chip sales driven by AI-enabled Android phones. The market for on-device AI processors is growing, with Samsung's Galaxy S24 offering real-time translating and image-based web search. A potential AI-enabled iPhone launch could further stimulate the market, benefiting Qualcomm. The close integration of components required for on-device AI processing plays to Qualcomm's strengths in modem and RF chips. Additionally, Qualcomm's presence in AI-enabled PCs is expected to increase with the launch of several models later this year. Despite uncertainty surrounding AI's impact on smartphone and PC sales, Qualcomm's valuation is not yet reflecting the potential upside.