Qualcomm's Sales and Profit Forecast Exceeds Expectations

Qualcomm Provides Strong Forecasts for First Quarter

Qualcomm reported on Wednesday that it expects to exceed Wall Street's expectations for sales and earnings in the first fiscal quarter, as demand in the smartphone industry shows signs of recovery.

The company has set its projected sales and adjusted earnings for the current fiscal first quarter at $12.2 billion and $3.40 per share, respectively. These figures surpass analyst forecasts of $11.62 billion and $3.31 per share.

In the fiscal fourth quarter ending September 29, Qualcomm reported $11.27 billion in sales and adjusted earnings of $3 per share. These figures are above Wall Street's expectations of $10.79 billion in sales and $2.88 in adjusted earnings.

Qualcomm is one of the largest suppliers of modem chips that connect smartphones to wireless data networks, and it is also expanding into other areas such as laptops and automobiles. The company has been a supplier for Apple for many years, but Qualcomm has indicated that it expects Apple to eventually transition to its own modems since 2021.

Qualcomm CEO Cristiano Amon stated in an interview with Reuters that the company's results and forecasts stem from a wave of consumers upgrading mid-range smartphones to more expensive devices. Amon noted, “A clear distinction is beginning to emerge between expensive premium devices and low-cost devices.”

This year, Qualcomm's shares have risen approximately 12.5%, while the Nasdaq Composite Index has gained 20.9%. Investors had concerns about how the company would profit from tariff impacts in the smartphone chip business and the AI boom. However, last month, Qualcomm introduced a new series of AI chips for data centers, causing its stock to rise 20% in a single day.

On Wednesday, Qualcomm announced that new U.S. tax laws resulted in a $5.7 billion non-cash liability in the fiscal fourth quarter, impacting earnings by around $5.29 per share. The company indicated that it expects to be subject to the U.S. alternative minimum tax for the next fiscal year, but this would not affect adjusted results.