Stock dips after earnings as revenue forecast lies in line with expectations
Qualcomm Inc. blew out quarterly profit estimates in its most recent report Wednesday, but its shares moved lower in choppy aftermarket action as the company’s revenue forecast merely met expectations at the midpoint.
As artificial intelligence increasingly dominates the narrative for the chip sector, Qualcomm’s QCOM, +1.73% management said the company is among the beneficiaries of the AI wave. Chief Executive Cristiano Amon called out how the company’s Snapdragon technology features into the Samsung Galaxy S24 Ultra platform.
That device has various on-device AI features, including translation. “This marks the beginning of how [generative AI] will evolve the overall smartphone experience and highlights the significant opportunity for Snapdragon platforms,” he said.
The company is also seeing favorable AI smartphone trends with some of its Chinese customers, Amon added.
“Eventually, at a minimum it’s going to have a favorable impact on mix,” he said, as premium smartphones represent the fastest-growing segment of the handset market.
Qualcomm’s overall revenue for the fiscal first quarter rose to $9.94 billion from $9.46 billion a year prior, whereas the FactSet consensus was for $9.51 billion.
The company’s QCT semiconductor business grew revenue by 7% to $8.4 billion, while analysts had been looking for $8.1 billion. Revenue for the company’s QTL licensing segment was down 4% to $1.5 billion but ahead of the $1.4 billion consensus view.
The company reported quarterly net income of $2.8 billion, or $2.46 a share, up from $2.2 billion, or $1.98 a share, in the year-earlier period. On an adjusted basis, Qualcomm earned $2.75 a share, while analysts were modeling $2.37 a share.
“Looking ahead, we are building on this momentum with our leading Snapdragon platforms and technology differentiation in connectivity, computing and on-device generative AI, across handsets, automotive, PC, [extended reality] and industrial [Internet of Things],” Chief Executive Amon said in the company’s earnings release.
Qualcomm shares initially traded higher in after-hours action following the report’s release, but quickly gave up those gains and were last down 2%.
Despite beats in the latest quarter, the company’s revenue outlook for the current one was largely in line with the consensus view.
For the March quarter, the company expects $8.9 billion to $9.7 billion in revenue, whereas the FactSet consensus was for $9.3 billion. Management anticipates that QCT revenue will come in between $7.6 billion and $8.2 billion, while analysts had been looking for $7.9 billion from that segment.
The company also models $2.20 to $2.40 in adjusted earnings per share for the fiscal second quarter, with the midpoint of that range beating out the $2.25 FactSet consensus view.
