Qualcomm reported strong quarterly sales growth with a revenue of $11.7 billion for the quarter ending December, surpassing consensus estimates of $10.9 billion and marking a 17 percent year-on-year increase. However, the company’s shares fell more than 4.5 percent in after-hours trading.
Qualcomm’s AI-powered future looks bright but investors aren’t convinced
For the quarter, Qualcomm’s adjusted earnings per share (EPS) reached $3.41, exceeding the expected $2.96. Despite this success, the company’s guidance for the March quarter indicated revenue expectations between $10.2 billion and $11 billion, which is in line with analyst estimates but showcases fluctuations due to seasonality.
The company’s QCT division, which includes chip sales, reported a record revenue of $10.1 billion, with mobile handset sales increasing 13 percent to $7.57 billion, surpassing expectations of $7.04 billion. Notably, Qualcomm’s automotive sector grew 61 percent to $961 million, depicting a significant shift in market strategy as the company diversifies beyond smartphones.
Qualcomm’s IoT business also performed well, achieving a revenue of $1.55 billion, up 36 percent year-over-year. The Snapdragon 8 Elite platform has gained notable traction, particularly being adopted by Samsung’s flagship AI smartphone, the Galaxy S25. Increased demand was also observed for premium-tier smartphones in China.
In a licensing dispute with Arm, Qualcomm emerged victorious; a US jury ruled predominantly in its favor. The resolution of this dispute allows Qualcomm to continue using Arm’s architecture, with no indications from Arm to terminate the existing agreement.
Arm stock declines 4% after jury’s ruling on Qualcomm case
For the current quarter, Qualcomm anticipates adjusted earnings between $2.70 and $2.90 per share. The Fortune 500 chipmaker outlined that three of its key markets experienced growth during the quarter, with total net income increasing by 15 percent to $3.18 billion.
Qualcomm also reported $1.54 billion in revenue from its QTL (Qualcomm Technology Licensing) division while securing new licensing agreements with major Chinese manufacturers. The company paid $942 million in dividends and allocated $1.8 billion toward share repurchases during the quarter.
In a letter to investors, Qualcomm’s CEO Cristiano Amon highlighted that the success of AI applications, specifically with edge computing on smartphones, represents new opportunities. He noted that Qualcomm’s chips are positioned well to support advancements in on-device AI capabilities.
However, the QTL segment faces challenges as it projects flat revenue guidance for fiscal 2025 compared to 2024, indicating potential hurdles in maintaining growth in its licensing business amid unresolved negotiations with Huawei. Additionally, Qualcomm noted the impact of potential cost increases due to TSMC’s pricing for advanced chip processes.
Featured image credit: Qualcomm
