Qualcomm becomes the latest chip company to support artificial intelligence on its path to an earnings beat

Qualcomm Inc. topped quarterly profit estimates in its most recent report on Wednesday, but its shares fell in choppy aftermarket action as the company’s revenue forecast merely met expectations halfway.

As AI increasingly dominates the narrative in the chip industry, Qualcomm’s QCOM,
management said the company is among the beneficiaries of the AI ​​wave. CEO Cristiano Amon explained how the company’s Snapdragon technology is present in the Samsung Galaxy S24 Ultra platform.

That device has various AI features built-in, including translation. “This marks the beginning of how [generative AI] will evolve the overall smartphone experience and highlight the significant opportunities for Snapdragon platforms,” he said.

The company is also seeing favorable AI smartphone trends with some of its Chinese customers, Amon added.

“Ultimately, at a minimum it will have a favorable impact on the mix,” he said, as premium smartphones represent the fastest-growing segment of the handset market.

Qualcomm’s overall revenue for the fiscal first quarter rose to $9.94 billion from $9.46 billion a year earlier, while the FactSet consensus was $9.51 billion.

The company’s QCT semiconductor business saw revenue rise 7% to $8.4 billion, while analysts expected $8.1 billion. Revenue for the company’s QTL licensing segment fell 4% to $1.5 billion, but above the consensus forecast of $1.4 billion.

The company reported quarterly net income of $2.8 billion, or $2.46 per share, up from $2.2 billion, or $1.98 per share, in the year-earlier period . On an adjusted basis, Qualcomm earned $2.75 per share, while analysts had expected $2.37 per share.

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“As we look ahead, we are building on this momentum with our core Snapdragon platforms and technology differentiation in connectivity, computing and generative AI across devices, across phones, cars, PCs, [extended reality] and industrial [Internet of Things]” CEO Amon said in the company’s earnings release.

Qualcomm shares initially traded higher in after-hours trading after the report was released, but quickly gave up those gains and fell 2%.

Despite last quarter’s beating, the company’s revenue outlook for the current quarter was largely in line with consensus view.

For the March quarter, the company expects revenue between $8.9 billion and $9.7 billion, while the FactSet consensus was $9.3 billion. Management expects QCT’s revenue to be between $7.6 billion and $8.2 billion, while analysts expected $7.9 billion from that segment.

The company also expects adjusted earnings per share of between $2.20 and $2.40 for the fiscal second quarter, with the midpoint of that range beating the FactSet consensus view of $2.25.

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