Chipmaker Qualcomm (QCOM) is set to report its third-quarter earnings on Wednesday, with the focus expected to be on the impact of artificial intelligence (AI) on the smartphone market and the company’s data center expansion plans.

The market expects Qualcomm to report third-quarter earnings per share (EPS) of $2.21 and revenue of $9.6 billion, down from last year’s third-quarter EPS of $2.77 and revenue of $10.3 billion. Analysts note that the smartphone industry is facing challenges due to the strain on memory chip supply and rising prices caused by AI infrastructure development; global smartphone shipments fell 11% year-over-year in the second quarter.

To reduce its reliance on the mobile business, Qualcomm is actively expanding into the AI data center sector. The company expects its data center products to generate $5 billion in revenue in fiscal year 2027 and has doubled its forecast for non-mobile sales in fiscal year 2029 to $40 billion. Nevertheless, revenue for Qualcomm’s CDMA Technologies (QCT) division—which includes smartphone, IoT, and automotive sales—is expected to decline 8% year-over-year to $8.2 billion, with smartphone sales projected to fall 21% to $4.9 billion. However, automotive-related sales are expected to grow 49% to $1.4 billion.