Qualcomm jumps 5% in after-hours trade after investor day

Qualcomm shares surged more than 5% in after-hours trading Wednesday, erasing the prior session's steep losses as investors digested the chipmaker's investor day presentation.

Qualcomm (QCOM) climbed as much as 5.3% in extended trading, recovering from an 8.5% decline during Tuesday's regular session that wiped out roughly $15 billion in market value. The rebound came after the company hosted its investor day Wednesday, where management was expected to outline its strategy for expanding beyond smartphones into automotive, AI data centers, and edge computing.

The after-hours rally suggests the presentation addressed investor concerns about Qualcomm's ability to compete in AI chips against Nvidia (NVDA), Broadcom (AVGO), and Advanced Micro Devices (AMD) — companies that dominate the data center AI market. Qualcomm's stock has gained 30% over the past 12 months, a fraction of the PHLX Semiconductor Index's (SOX) 160% surge over the same period.

"Qualcomm's opportunity lies in inference at the edge, not training in the cloud — a market that's still taking shape," said Stacy Rasgon, an analyst at Bernstein. "The question is whether they can convert their mobile AI leadership into a meaningful data center business before the window closes."

The investor day comes a day after Bloomberg reported Qualcomm is in discussions to acquire Modular Inc., an AI infrastructure software firm, for an estimated $4 billion. A deal could be announced in the coming weeks, according to the report. Modular's technology helps developers deploy AI models more efficiently across different hardware — a capability that could strengthen Qualcomm's software stack as it pushes into AI inference chips for servers and PCs.

Qualcomm's automotive business has emerged as a bright spot, with revenue reaching a record $1.3 billion in the most recent quarter, up 38% year over year. The company's Snapdragon Digital Chassis platform has been adopted by automakers including BMW, Mercedes-Benz, and General Motors. Handset revenue, still the company's largest segment, fell 13% to $6 billion in the same period, constrained by memory shortages and weak Chinese OEM demand.

Bank of America analysts raised their price target on Qualcomm to $195 from $165 ahead of the investor day but maintained an underperform rating, citing the company's late entry into "a fast-growing but hyper competitive AI market full of large incumbents." The stock trades at roughly 24 times trailing earnings, a discount to Nvidia's 35 times and Broadcom's 28 times.

Qualcomm authorized a $20 billion share repurchase program in its most recent quarter and bought back $2.8 billion in stock, signaling confidence in its long-term outlook even as it invests in new growth areas. The company's ability to return capital while funding AI expansion will be a key test for management, with the after-hours rally indicating investors are giving the strategy the benefit of the doubt — at least for now.

This article is for informational purposes only and does not constitute investment advice.