Qualcomm revenue forecast beats estimates amid AI push, shares gyrate


By Stephen Nellis and Max A. Cherney

(Reuters) -Qualcomm on Wednesday forecast fiscal second-quarter revenue barely above Wall Road estimates and gross sales consistent with market expectations however traders had been involved in regards to the chip maker’s Android gross sales in China.

The gross sales outlook displays curiosity in new Qualcomm chips with options designed to assist run chatbots, picture turbines and different artificial-intelligence options instantly on a tool as an alternative of in cloud computing knowledge facilities.

Shares seesawed in after-hours buying and selling and had been final down 0.8%.

Qualcomm executives instructed analysts on a convention name that after a flurry of creating new chips for Android telephones launched on the finish of final yr, they anticipate chip gross sales into the corporate’s most vital market to be flat within the present fiscal second quarter. Analysts mentioned this indicated Qualcomm is shedding market share to rivals in China.

Qualcomm predicted gross sales and adjusted revenue with a midpoint of $9.30 billion and $2.30 per share for the present fiscal second quarter ending in March. The outlook compares with analyst estimates of $9.30 billion and $2.25 per share, in response to knowledge from LSEG.

Along with the outcomes, the corporate mentioned on Wednesday it has reached a chip provide cope with Samsung to produce chips globally for its top-end Galaxy S24 mannequin. However that deal doesn’t cowl all of Samsung’s latest fashions, a few of which is able to use Samsung’s personal chips, a reversal from the earlier technology of telephone the place the South Korean electronics big used Qualcomm chips solely.

Certainly, Qualcomm is dealing with challenges on a number of fronts, with Huawei utilizing Qualcomm just for 4G telephones because of U.S. export restrictions and Taiwan’s MediaTek difficult Qualcomm’s stronghold in mid- and premium-tier Android telephones.

“A easy comparability towards MediaTek outcomes and outlook clearly confirmed our concern that Qualcomm is shedding market share within the Chinese language Android market,” mentioned Kinngai Chan, an analyst at Summit Insights.

In its patent enterprise, Qualcomm mentioned Apple prolonged a licensing deal by way of March 2027. Qualcomm mentioned in September it had signed a deal to produce Apple with chips by way of 2026 however famous that a part of a patent deal made with the iPhone maker within the wake of a serious antitrust battle was set to run out subsequent yr.

For Qualcomm, “5% income progress and 24% earnings progress could be very constructive in a skeptical earnings season atmosphere,” mentioned Thomas J. Hayes of Nice Hill Capital.

San Diego, California-based Qualcomm can also be increasing into different markets akin to private computer systems, with companions akin to Dell Applied sciences and Lenovo Group anticipated to debut laptops with chips that Qualcomm claims are quicker than Apple’s in-house processors.

For the fiscal first quarter ended on Dec. 24, Qualcomm reported gross sales and adjusted revenue of $9.94 billion and $2.75 per share, above estimates of $9.52 billion and $2.37 per share, in response to LSEG knowledge.

In Qualcomm’s chip phase, the corporate forecast fiscal second-quarter gross sales with a midpoint of $7.9 billion, above analyst estimates of $7.86 billion. Qualcomm predicted second- quarter gross sales with a midpoint of $1.3 billion in its patent-licensing enterprise, consistent with estimates of $1.3 billion.

For the just-ended fiscal first quarter, Qualcomm mentioned chip and licensing revenues had been $8.42 billion and $1.46 billion, respectively, above/beneath analyst estimates of $7.99 billion and $1.41 billion, in response to LSEG knowledge.

Inside its chip enterprise, Qualcomm mentioned that cell handsets generated $6.69 billion in gross sales within the first quarter, above estimates of $6.37 billion, in response to knowledge from Seen Alpha. Automotive and Web-of-Issues chip revenues within the first quarter had been $598 million and $1.14 billion, respectively, in contrast with analyst estimates of $518.3 million and $1.22 billion.

(Reporting by Stephen Nellis and Max A. Cherney in San FranciscoAdditional reporting by Arsheeya Singh Bajwa in Bengaluru Modifying by Sayantani Ghosh and Matthew Lewis)

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