Qualcomm (QCOM) has shifted the narrative with its $5 billion guidance for AI data center business in fiscal 2027 during its investor day event, Morgan Stanley said in a Thursday note.

"We have been wrong to be skeptical," the report said. "While Qualcomm is a late entrant, a newly emerging trillion dollar data center market creates significant opportunities," it added.

The $5 billion forecast is at least 2 times higher than expected, and puts the firm into the winners category, while its $15 billion guidance in 3 years feels more aspirational, the note said.

The report said not every question on the product roadmap was answered but revenue strength seems credible, especially given the current narrative driven market.

"We remain a bit skeptical, but not enough to forecast underperformance given the overall strength in AI," it said.

Morgan Stanley upgraded the stock to equal weight from underweight and raised its price target to $231 from $146.

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