Qualcomm shares surged 16% after hours on Wednesday after CEO Cristiano Amon told investors the chipmaker will begin shipping data center chips to "a large hyperscaler" before year-end — and declared that China smartphone sales have hit bottom.

The stock had initially dropped 7% on a third-quarter revenue forecast that missed Wall Street expectations. Amon's comments on the earnings call reversed the decline within minutes.

A data center play years in the making

Qualcomm has long trailed Nvidia in the race to supply chips for AI workloads. The company disclosed its own data center silicon last year, but Wednesday's call marked the first confirmation of a named-class customer ready to take shipments.

Amon declined to identify the hyperscaler, saying more details would come at Qualcomm's investor day in June.

Separately, OpenAI is reportedly partnering with Qualcomm to develop an AI chip for smartphones that could power a future device built around AI agents. "You should expect that we're working not only with them, but most of the AI companies today," Amon told CNBC. "So the design engagement is very robust."

Earnings beat, guidance miss

Qualcomm reported adjusted earnings per share of $2.65 on revenue of $10.6 billion for the second quarter. EPS beat estimates by nine cents. Revenue matched expectations.

Third-quarter guidance came in at $9.2 billion to $10 billion, below the $10.19 billion consensus compiled by StreetAccount.

The shortfall reflects a memory price surge that has hit consumer electronics broadly:

Amon told CNBC the current quarter will mark the trough for China sales because "customers are running out of inventory." Qualcomm's licensing business, which charges fees on nearly every smartphone sold, gives the company direct visibility into end-market volumes.

Automotive strength, Apple loss

Qualcomm's automotive segment grew a record 38% year-over-year, driven by processors that power automated driving systems. Amon said the division is "starting to get scale."

On the other side of the ledger, Apple began replacing Qualcomm modems in iPhones with its own in-house chip starting in 2025 — removing a major revenue stream.

Amon said the memory shortage has not affected the company's data center chip timeline, noting that Qualcomm's "scale is probably not the same as the established providers" given its recent entry.

Qualcomm's investor day in June is expected to provide specifics on the hyperscaler contract, the OpenAI smartphone partnership, and the company's broader AI roadmap.