Qualcomm, a leader in wireless chip technology, recently reported mixed financial results for its fiscal third quarter and provided a less-than-optimistic forecast for the upcoming quarter. This news led to a significant drop in Qualcomm’s stock price.
In the quarter ending June 25, Qualcomm reported adjusted earnings of $1.87 per share on sales of $8.45 billion. These figures were mixed compared to analyst expectations, which anticipated earnings of $1.81 per share on higher sales of $8.51 billion. Compared to the same period last year, Qualcomm’s earnings saw a 37% decline, and sales decreased by 23%.
This marked the third consecutive quarter of declining sales and earnings for Qualcomm, primarily due to a slowdown in global smartphone sales. Looking ahead, Qualcomm has projected earnings of $1.90 per share on sales of $8.5 billion for the current quarter—again falling short of analyst expectations of $1.92 per share on sales of $8.74 billion. This forecast is sharply down from the year-earlier period, when Qualcomm reported earnings of $3.13 per share on sales of $11.39 billion.
The disappointing financial outlook caused Qualcomm’s stock (QCOM) to fall by 8.2%, closing at $118.70. Prior to this, the stock had already dropped 2.1% during regular trading on Wednesday.
Despite the challenging market environment, Qualcomm CEO Cristiano Amon remains optimistic about the future, particularly regarding the potential of artificial intelligence (AI) to drive new demand for the company’s chips. Amon highlighted the burgeoning role of on-device AI, which he believes will soon create a significant demand inflection point for Qualcomm’s products across various applications. He asserted that Qualcomm is uniquely positioned to lead this transition due to the superior computing performance and power efficiency of their platforms.
Qualcomm currently ranks as the 10th out of 36 stocks in its industry group. It holds a Composite Rating of 85 out of 99, indicating strong performance metrics relative to other stocks in the index.
Other companies in the semiconductor sector, such as Qorvo and SiTime, also reported earnings, with mixed results. Qorvo’s stock experienced a slight dip despite beating earnings expectations, while SiTime’s stock surged 8.7% following its positive earnings report.
The broader semiconductor market continues to face fluctuations influenced by global supply chain issues, evolving market demands, and the rapid advancement of technologies like AI. For investors and market watchers, Qualcomm’s adaptability in leveraging new technological trends such as AI and expanding into new markets will be key areas to watch in the coming quarters.