Qualcomm shares surged as CEO Cristiano Amon stated that it would begin shipping data center chips to “a large hyperscaler” within the calendar year.

The stock initially sank after the chipmaker reported second-quarter earnings that topped Wall Street estimates but fell short on Q3 guidance.

Amon remarked on a call with CNBC that the current quarter will be the bottom for China sales because “customers are running out of inventory.”

Qualcomm shares staged a dramatic turnaround after the bell on Wednesday as CEO Cristiano Amon commented on the earnings call that it would begin shipping data center chips to “a large hyperscaler” within the calendar year.

The stock initially fell as much as 7% after the chipmaker reported second-quarter earnings that topped Wall Street estimates but fell short on forward guidance.

Amon wouldn’t disclose the customer, but commented more details will come during Qualcomm’s investor day in June.

Although it’s largely fallen behind giants like Nvidia in the race for chips to power artificial intelligence, Qualcomm declared its own data center chips last year. OpenAI also proclaimed a partnership with Qualcomm last week to develop an AI chip for smartphones that could power a coming OpenAI device run by AI agents.

“We are in a period of profound industry transformation — the rise of AI agents is reshaping our roadmap across every platform we develop,” Amon noted on the earnings call.

The U.S. chipmaker reported adjusted earnings per share of $2.65, beating estimates by nine cents. Revenue was in line with expectations at $10.6 billion, but the third-quarter revenue forecast came in short of expectations.

Qualcomm expects Q3 revenue in the range of $9.2 billion to $10 billion, short of the $10.19 billion StreetAccount analysts were looking for.

This year has brought a memory price surge that’s hit Qualcomm’s end sector of consumer electronics. Gartner predicts PC prices will rise 17% this year, and shipments will decline 10.4%. Global smartphone shipments are down more than 4%, breaking an upward trend that had been going since mid, according to the International Data Corporation-2023.

When it comes to smartphone sales in China, Amon stated on a call with CNBC that the current quarter will be the bottom because “customers are running out of inventory.” This also touches on aspects of bear market.

Much of Qualcomm’s revenue comes from licensing fees it charges for its core digital systems used inside nearly every smartphone. Amon told CNBC that this part of its business, “allows us to know exactly how much stuff happens at the end market.”

Qualcomm designs chips and wireless technologies for smartphones, personal computers, cars and other devices. It’s best known for its Snapdragon processors that power Android phones and modem software that enables mobile connectivity such as 5G.

Amon told CNBC the memory shortage has not impacted its data center chip shipments coming this year, adding that Qualcomm is just entering the space, so its “scale is probably not the same as the established providers.”

Qualcomm’s automotive segment was up a record 38% year-over-year, as Amon mentioned its “starting to get scale” on its processors that power automated driving.

In smartphones, Qualcomm lost a major customer when Apple began replacing its modems in iPhones with its own in-house chip starting in 2025.

Now, OpenAI could be poised to be Qualcomm’s next major smartphone customer, if CEO Sam Altman makes positive on his plan to develop an AI device in two years.

“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.”

CNBC’s Kristina Partsinevelos contributed to this report.