(Reuters) - Chip designer Qualcomm ( QCOM ) on Wednesday forecast sales and profit in the current quarter would exceed Wall Street estimates as the company benefits from a recovering smartphone market, and its shares rose 11% in extended trading.

Qualcomm ( QCOM ) said it expects sales and adjusted profits for its fiscal first quarter, which will cover the holiday shopping season in U.S. and European markets, with a midpoint of $10.90 billion and $2.95 per share. Wall Street expected $10.59 billion and $2.86 per share, according to data from LSEG.

For the fiscal fourth quarter ended Sept. 29, Qualcomm ( QCOM ) said sales and adjusted profits were $10.24 billion and $2.69 per share, beating analyst expectations of $9.91 billion and $2.56 per share.

The San Diego, California-based company is the biggest supplier of smartphone chips and is benefiting from a recovery in the smartphone markets as consumers upgrade devices for artificial intelligence applications such as chatbots and image generators.

While Qualcomm's ( QCOM ) current outlook topped Wall Street expectations, investors are still trying to gauge how quickly its revenue stream from Apple ( AAPL ) will fade. Apple ( AAPL ) is working on its own modem chips, and Qualcomm ( QCOM ) has warned investors that the iPhone maker, which some analysts believe accounts for up to a quarter of Qualcomm's ( QCOM ) revenue, will stop using its chips at some point.

While Qualcomm ( QCOM ) has a deal to keep selling chips to Apple ( AAPL ) until at least 2026, Wall Street is watching to see whether Qualcomm's ( QCOM ) efforts to break into laptops and artificial intelligence in data centers will ramp up quickly enough to offset declines in Apple ( AAPL ) revenue.

Qualcomm ( QCOM ) is also in a protracted legal dispute with Arm, whose technology Qualcomm ( QCOM ) uses in almost of all its flagship products. Arm last month threatened to cancel a key license with Qualcomm ( QCOM ), and the trial in a case brought by Arm in a license dispute is set to start in December.

In Qualcomm's ( QCOM ) chip segment, the company forecast fiscal first-quarter sales with a midpoint of $9.3 billion, compared with analyst estimates of $9.02 billion, according to Visible Alpha data. Qualcomm ( QCOM ) predicted first-quarter sales with a midpoint of $1.55 billion in its patent-licensing business, compared with estimates of $1.51 billion.

For the just-ended fiscal fourth quarter, Qualcomm ( QCOM ) said chip and licensing revenues were $8.68 billion and $1.52 billion, respectively, compared with estimates of $8.42 billion and $1.45 billion, according to Visible Alpha data.