Qualcomm gives better-than-expected revenue forecast as company pushes AI-powered smartphones

Qualcomm
reported

fiscal
second-quarter
earnings
on
Wednesday
that
surpassed
Wall
Street
expectations,
and
provided
a
strong
guide
for
the
current
quarter.

Shares
rose
about
4%
in
extended
trading.

Here’s
how
it
did
versus
LSEG
consensus
estimates
for
the
quarter
ended
March
24:

• 
  Earnings
  per
  share:
  $2.44
  adjusted
  vs.
  $2.32
  expected
• 
  Revenue:
  $9.39
  billion
  adjusted
  vs.
  $9.34
  billion
  expected

Net
income
during
the
quarter
was
$2.33
billion,
or
$2.06
per
share,
versus
$1.7
billion,
or
$1.52
per
share,
in
the
year-earlier
period.

Qualcomm
said
it
expected
between
$8.8
billion
and
$9.6
billion
in
sales
in
the
current
quarter,
higher
than
Wall
Street
expectations
of
$9.05
billion.
Analysts
were
looking
for
earnings
guidance
of
$2.17
per
share,
versus
the
company’s
forecast
of
between
$2.15
and
$2.35.

The
company
said
on
the
earnings
call
that
it
expected
overall
handset
revenues
to
decline
during
the
current
quarter
by “mid-single
digit
percent”
because
of
a
lack
of
summer
smartphone
launches,
which
is
a
typical
seasonal
pattern.

Qualcomm’s
most
important
business
is
its
handsets
business.
It
sells
processors,
modems
and
other
parts
for
smartphones
—
primarily
Android
devices,
but
also
some
modem
parts
in
iPhones.

Handset
sales
rose
1%
year
over
year
to
$6.18
billion,
signaling
that
the
smartphone
market
may
be
recovering
after
a
few
years
of
post-Covid
slumping.
Qualcomm
called
out
strong
demand
for “premium
tier”
smartphones
that
require
the
most
advanced
chips,
especially
in
China.
It
said
quarterly
revenue
from
Chinese
phone
makers
jumped
40%
from
the
year-earlier
period.

“We
have
not
seen
signs
of
weakness
in
the
Android
premium
market
in
China,”
Qualcomm
CEO
Cristiano
Amon
said
on
an
earnings
call
with
analysts. “A
lot
of
the
strength
is
really
coming
from
premium
devices
on
Oppo,
OnePlus,
Vivo.”

Qualcomm
calls
the
phones
that
use
its
best
chips “AI-powered
smartphones,”
citing
features
such
as
generative
email
completion,
live
translation,
and
virtual
assistants
that
use
the
chips
specialized “NPU”
AI
section.
One
such
phone
is

Samsung’s
Galaxy
S24
Ultra,
which
launched
earlier
this
year.

“We
are
seeing
the
very
first
instances
of
on-device
AI
and
Gen
AI
being
launched
in
premium
devices
and
that
is
resonating
well
with
the
consumer,”
Amon
said,
adding
that
the
company
is
targeting
performance
per
watt
as
its
primary
artificial
intelligence
benchmark.

The
company’s
automotive
business,
which
sells
chips
to
automakers,
also
showed
signs
of
growth,
rising
35%
year
over
year
to
$603
million.
Qualcomm
said
it
expected
consecutive
double
digit
percentage
growth
in
the
division
in
the
current
quarter.
Revenue
in
the “Internet
of
Things”
business
—
lower-cost
chips
and
chips
for
virtual
reality
—
declined
11%
year
over
year
to
$1.24
billion.

Those
three
business
lines
are
reported
together
as
QCT,
the
company’s
chip
business,
which
saw
a
1%
year-over-year
sales
increase
to
$8.03
billion.

The
company’s
licensing
business,
QTL,
in
which
it
collects
fees
from
companies
that
want
to
integrate
5G
or
cellular
technology
into
their
products,
increased
2%
to
$1.32
billion
from
the
year-earlier
period.

Qualcomm
said
it
paid
$895
million
in
dividends
and
repurchased
$731
million
in
shares
during
the
quarter,
and
raised
its
quarterly
dividend
to
85
cents
from
80
cents
previously.