Qualcomm’s QI Financial Outlook Causes Stock Prices to Soar

Global smartphone processor seller, Qualcomm has given a bullish sales forecast for the fourth quarter. Qualcomm’s financial outlook points to a bright future in the smartphone device industry.

Yahoo Finance reported that Qualcomm shares surged during early trading on Thursday, November 7, 2024.

Qualcomm’s Market Advantage

Qualcomm has a strong advantage in the US market because its chips are used in popular smartphones, particularly high-end models. Investors are keen to see whether there are signs of a rebounding smartphone market, especially in China. Qualcomm’s forecast is a sign that the industry is on the path to recovery and that smartphone chip demand is likely to soar.

Wednesday’s outlook signals that a recovery in demand is underway. The company said China sales of Android-based phones increased 40% in the fiscal year, which ended Sept. 29, 2024.

High Revenue Projections

Qualcomm forecasts revenues amounting between $10.5 billion to $11.3 billion for the quarter ending in December 2024. These projections are within the $10.5 billion range that analysts estimated. Qualcomm’s Q1 profit could be as high as $3.05 per share, which is more than Wall Street projections.

Qualcomm’s CEO Cristiano Amon has been intentional in getting the chip maker into computing and automotives. However, Qualcomm still generates over 60% of its revenue through phone-related chips.

Surpassing Analyst Expectations

Qualcomm QCOM stock rose by 7% on November 7, 2024 after closing at $172.99 in New York. This year alone, the company’s stocks have risen by 20%. Qualcomm’s earnings per share was $2.69 in quarter four. Its revenue hit $10.2 billion, which represented a 19% growth in the same quarter. This is slightly higher than what Wall Street analysts had projected, which is $9.91 billion in revenue and $2.69 profit per share.

Sales from phone-related products rose by 12% to hit the $6.1 billion mark during this period, about a hundred million more than what analysts had projected. Sales from Qualcomm chips, which is used in vehicles increased by 68% to reach a high of $899 million. Analysts had expected lower sales amounting to $816 million. The company raked in $1.68 billion from the sale of connected-device chips against the projected $1.55 billion.

Qualcomm’s Profit Drivers

Qualcomm’s profits are driven by the sale of chips to mobile phone manufacturers. Big tech companies like Apple are among Qualcomm’s biggest customers. Apple uses Qualcomm Snapdragon chips in iPhones. The company is however working on an in-house alternative that will replace this component. Qualcomm has been doing business with Apple for a longer period than most people expected. The company has cautioned investors that with time, this revenue source will diminish.

Qualcomm’s profitability has also been driven by licensing of critical technology that underpins modern mobile networks. Companies that manufacture mobile phones pay Qualcomm a fee whether they use its chips or not. The company has authorized a share buyback program worth $15 billion to replace the $10 billion plan it had launched in October 2021.

The company has been working to diversify its product offerings in other areas. In September 2024, Qualcomm unveiled a new AI-powered PC processor as it sought to boost its efforts to overturn Intel’s dominance in the PC processor market.