Qualcomm beat Wall Street estimates for the quarter, but its forecast for the current quarter came in lighter than expected. Rising memory costs are hurting smartphone demand, and handset chip sales fell 26%.
Qualcomm's stock slid 6% in extended trading on Wednesday after the chipmaker issued a forecast below analyst expectations. The results themselves topped estimates.
Results beat, outlook falls short
Qualcomm reported adjusted EPS of $2.17 on revenue of $10.32 billion, versus $2.16 and $10.11 billion expected, according to LSEG consensus estimates. Overall company revenue fell 8% from a year earlier.
For the current quarter, the company sees revenue of $10.4 billion to $11.2 billion and earnings per share of between $2.15 and $2.35. Analysts expected $2.27 and $10.48 billion.
Memory costs weigh on handsets
Most of Qualcomm's chip sales come from smartphone system-on-chips and modems, a market in turmoil as rising memory costs force handset makers to raise prices and hurt demand. Qualcomm raised its own prices in September, but handset chip sales fell 26% to $5.14 billion, trailing a StreetAccount estimate of $5.21 billion.
Still, the company said it is starting to see sequential growth in the category and that Android shipments in China have bottomed. It also predicts the handset market will be flat in 2027.
Automotive revenue soars 89%
Automotive revenue soared 89% to $1.99 billion, beating StreetAccount expectations of $1.66 billion. Internet of things revenue increased 4% to $1.88 billion. Revenue at licensing unit QTL sank 7% to $1.3 billion.
Qualcomm is also pushing into AI data center infrastructure. CEO Cristiano Amon said the company had $650 million in data center revenue in the quarter and expects $5 billion in fiscal 2027.
Amon pointed to supply as the constraint. According to CNBC: “We don’t have a demand issue; it’s a supply issue,” Amon said.
Source: CNBC
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