As far as Cristiano Amon is concerned, we're just in the first inning of the artificial intelligence World Series.
Qualcomm's (QCOM) -) CEO was responding to a question during the keynote interview at the Consumer Electronics Show in Las Vegas about the state of generative AI, which can produce various types of content, including text, imagery, audio and synthetic data.
"I think we're in the first one heading towards the second," Amon told Fox Business anchor Liz Claman. "I think there's an incredible amount of potential to a lot of things that's going to happen...and we have been very passionate about the role of AI in the devices that we carry."
Amon said Qualcomm's DNA "is really about how to do high performance computing at a very low power."
During the interview, Amon talked about the impact of on-device generative AI.
CEO sees 'change in user experience'
"I think that's what we're going to see a change in user experience," he said. "You're going to have this assistant that is going to be there with you. It's going to learn from your behavior and that's what's unique about doing AI and the devices."
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"When you do a query on the cloud you provide some information the cloud doesn't know you," Amon said. "It can give you an answer, but when you provide the cloud and the device working together, the device has real context about where are you."
Artificial intelligence has been the source of fear and loathing in many circles as people are concerned AI is getting too smart for humanity's own good.
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"I need to know," Claman asked. "What scares you? There's an arms race of people who are running over each other to try and beat the other guy in developing this stuff."
"Let me give you a Qualcomm answer," Amon said. "For us, this is exciting because I will say in this space we are the underdog. This is an all-growth opportunity for Qualcomm."
Citi analyst Christopher Danely apparently sees the growth opportunity for Qualcomm as well, as he upgraded shares of the tech giant to buy from neutral and raised his target for the stock price to $160 from $110.
The shares moved up 0.8% to $140.20 in response and were up 2.54% on the week. While they are off 3.1% since the end of 2023, the broader picture is more important. Qualcomm was up 32% for all of 2023 after soaring 88% in the fourth quarter alone.
Extended contract with Apple
Danely said that he is confident about a recovery in the handset market.
In November, Qualcomm posted fourth-quarter earnings of $2.02 per share, beating analysts' estimates of $1.91. Revenue for the quarter came in at $8.67 billion compared with the consensus estimate of $8.51 billion.
"As we enter the age of generative AI, we're seeing an unprecedented pace of innovation," Amon said during an earnings call with analysts. "On-device Gen AI is evolving in parallel with Gen AI in the cloud, enabling entirely new use cases."
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Gen AI, he said, according to a transcript of the call, "has the potential to change how we interact with our devices, making the user experience more natural, intuitive, relevant, and personal with increased immediacy, privacy, and security."
"We have quickly established Qualcomm as a leader in own device Gen AI for smartphones, next-generation laptops, XR, and automotive, and we are well-positioned to benefit from this opportunity," he said.
Qualcomm is scheduled to report earnings on Jan. 31.
A few months earlier, the network equipment chipmaker said it extended a contract with Apple (AAPL) -) for another three years.
Qualcomm said the new deal with Apple will see it supply its Snapdragon 5G modem chips for Apple iPhones launched over three years starting in 2024. Qualcomm added that its long-term financial planning assumption sees a 20% share of chipset supply for the smartphone launch in 2026.
Apple and Qualcomm signed their existing deal in 2019 following years of legal challenges over back-dated royalty payments linked to a patent dispute settlement.
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