LAS VEGAS — Qualcomm is well positioned to capitalize on the shift to edge AI as generative artificial intelligence comes to smartphones, PCs and automobiles, the company's chief executive said at CES 2024. That bodes well for Qualcomm stock, an analyst said.
During a keynote conversation with Fox Business Network host Liz Claman late Wednesday, Qualcomm CEO Cristiano Amon discussed his company's strategy in AI.
The company's background in designing smartphone chips gives it a leg up in the edge AI market because of its expertise in "high performance computing at very low power," Amon said.
In afternoon trading on the stock market today, Qualcomm stock dipped 0.4% to 138.77.
AI Trend Only In First Inning
Amon cited the advantages of running generative AI applications on smartphones and other edge devices, including speed, privacy and personalization. But the trend is just getting started, he said.
The market is in the "first inning" of the generative AI trend and "heading into the second," he said. Currently AI capabilities are housed in cloud data centers.
On smartphones, AI will serve as an assistant that can predict your needs based on past activity, Amon said. After all, that device can record every action you take on it.
"The cloud doesn't know you," Amon said. On the other hand, your smartphone knows who you are and where you are. Qualcomm is working with Android smartphone vendors, such as Samsung and Chinese firms, on adding AI functionality to their handhelds.
Such edge AI devices will be able to do things like real-time translation and transcription of conversations, he said.
Notebook, Automotive Markets Next
Qualcomm also is pursuing the notebook computer market with its Snapdragon X Elite processor. The first Windows PCs with the processor are due out in mid-2024.
In addition, Qualcomm has an automotive chip business that is looking to add generative AI to cars.
"The car is a new computing space," Amon said. There will be new applications for productivity, communications and entertainment in the car, he said.
Amon envisions people talking to their cars like in the 1980s TV show "Knight Rider."
Qualcomm Stock Called Edge AI Beneficiary
In a recent note to clients, KeyBanc Capital Markets analyst John Vinh called Qualcomm stock one of the "beneficiaries of AI at the edge." Others include AMD, Arm and Intel.
Qualcomm stock also should benefit from an expected recovery in smartphone sales in 2024, Vinh said. The introduction of AI-enabled handsets from Samsung and others is a factor that should boost sales, he said.
"Qualcomm remains well positioned for an AI handset refresh," Vinh said. He rates Qualcomm stock as overweight, or buy.
The San Diego-based company recently launched its Snapdragon 8 Gen 3 mobile platform, which includes a dedicated neural processing unit. The chip can run AI workloads at low power and support AI models up to 10 billion parameters, including Meta Platforms' Llama 2 large language model.
China smartphone brands Honor, Oppo, Vivo and Xiaomi have announced plans to adopt the Snapdragon 8 Gen 3 chip.
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