Qualcomm Rises Early, Comes Down to Earth on OpenAI Speculation

Shares of former Pro Portfolio holding Qualcomm (QCOM) were zooming higher in pre-market trading Monday morning but have since returned to Earth.

The gist behind the pre-market move was a report that the company, as well as competitor MediaTek, are co-development partners for an ‌AI-first smartphone that the ChatGPT creator is planning, with mass production likely in 2028. Lending some credence to this speculation, OpenAI acquired former Apple (AAPL) design lead Jony Ive’s AI device startup io for ~$6.4 billion about a year ago.

Part of the reason for Qualcomm shares cooling off this morning is likely due to the would be timetable for 2028, but also questions as to whether OpenAI is aiming to compete with the likes of Apple and Samsung in the smartphone market. While Apple and OpenAI had a relationship to integrate ChatGPT into Siri and other tools, Apple has since moved in another direction with Google’s (GOOGL) Gemini and also added Anthropic’s Claude agent to its developer code alongside OpenAI.

For a moment, let’s assume that Qualcomm is indeed working with its competitor, MediaTek, which is rather unlikely. It still has to contend with headwinds for its core smartphone business and its PC ambitions in the form of available memory capacity, and as we discussed this morning, printed circuit board (PCB) costs.

Depending on the source, PC shipments in Q1 2026 rose 2.5%-4.0% year over year, but that is attributed primarily to demand being pulled forward amid escalating memory prices. During Intel’s (INTC) earnings call last week, while much attention was on AI demand for CPUs, the company said this:

We’re prudently planning for PC demand to weaken in the second half of the year and expect the full year PC unit TAM to be down low double-digit percent in line with industry peers and experts.

That is going to put a crimp in Qualcomm’s diversification plans as it prepares to wind down its iPhone relationship with Apple. Qualcomm's modem supply relationship with Apple is expected to end by fall 2027, with Apple transitioning to its own in-house modems.

Although a supply deal keeps Qualcomm chips in iPhones through 2026, Apple's reliance on Qualcomm will drop to 20% by then before being fully phased out. Over the 2023-2025 time frame, Apple was estimated to account for $7.3 billion-$7.8 billion in annual Qualcomm revenue, roughly 20% of overall revenue.

Qualcomm Shares

As for QCOM shares, despite Intel’s comments above and the expectation that smartphone industry shipments will decline in 2026, they have rallied back with the market and other chip stocks off their recent low near $125. In our view, that recalibrates the risk-to-reward tradeoff back to more on risk than potential reward. That and the likelihood Qualcomm management needs to reset its guidance for the coming quarters gives us more than enough reason to not consider calling the shares back into the Pro Portfolio at this time.

Apple Shares

In terms of Apple shares, this report about OpenAI potentially entering the smartphone space has them trading off modestly today. Our view is we will want to see if OpenAI’s move into the smartphone space is indeed real or if it is vaporware, with OpenAI more likely to focus on other AI-enabled devices.

At the time of publication, TheStreet Pro Portfolio was long AAPL and GOOGL.