Qualcomm Inc., a chip manufacturer (Nasdaq: QCOM), released second-quarter fiscal 2024 results that were better than expected. In light of the improving demand for chips with artificial intelligence and the indications of a rebound in the smartphone market, the business also released strong Q3 profits and revenue guidance. Overall, Qualcomm’s shares increased by $15.99, or 9.74%, from the previous close to settle at $180.10 at the end of Thursday’s trading session.
The corporation, which is headquartered in San Diego, California, posted second-quarter revenues of $9.39 billion, up from $9.28 billion in the corresponding quarter of fiscal 2023.
For the quarter ended March 24, 2024, Qualcomm posted net income of $2.33 billion, or $2.06 per share, compared with $1.70 billion, or $1.52 per share, in the quarter that ended March 26, 2023.
Earnings from continuing operations were $2.28 billion, or $2.02 per share, in 2Q 2024, up from $1.70 billion, or $1.52 per share, in 2Q 2023.
Excluding share-based compensation, among others, Qualcomm recorded Q2 2024 non-GAAP net income of $2.76 billion, or $2.44 per share, an increase from $2.42 billion, or $2.15 per share, in Q2 2023.
Analysts surveyed by LSEG had anticipated the company to report earnings of $2.32 per share on revenues of $9.34 billion.
Commenting on the results, Cristiano Amon, President and CEO of Qualcomm, stated, “We are pleased to report strong quarterly results, with EPS exceeding the high end of our guidance.”
Segment wise:
- Equipment and services revenues were $7.95 billion, an increase of 1.30% from last year.
- Licensing revenues remained almost unchanged at $1.44 billion.
Based on the nature of business:
- QCT revenues rose by 1% y-o-y to $8.03 billion.
- Handsets revenues rose by 1% y-o-y to $6.18 billion.
- Automotive revenues were $603 million, up 35% from last year. The company projects double-digit revenue growth in the current quarter.
- IoT revenues fell by 11% y-o-y to $1.24 billion.
- QTL revenues grew by 2% y-o-y to $1.32 billion. This division encompasses licensing fees from enterprises that want to use Qualcomm’s 5G technology.
The core focus of Qualcomm’s operations lies within its handset business segment, primarily catering to the sale of chips, modems, and assorted components tailored for mobiles. While its clientele predominantly comprises Android device manufacturers, Qualcomm also supplies modem components utilized in iPhones.
The company highlighted robust market demand for “premium tier” or “AI-powered” mobiles, which necessitate cutting-edge chipsets, reflecting a notable trend toward advanced technological specifications in the smartphone industry.
Looking ahead, Qualcomm forecasts Q3 revenues in the range of $8.80 billion to $9.60 billion. Similarly, the company expects Q3 earnings of between $2.15 and $2.35 per share. Wall Street analysts anticipate Qualcomm to report earnings of $2.17 per share on revenues of $9.05 billion.
During the quarter, the company paid $895 million in dividends. Additionally, the company repurchased shares worth $731 million. Qualcomm also upwardly revised its quarterly dividend to $0.85 per share from its prior level of $0.80 per share.
The quarterly earnings beat and solid Q3 outlook are expected to keep Qualcomm’s stock slightly bullish in the short term.
The historical price chart indicates that the stock of Qualcomm is rising after consolidating at $160 levels. The stock is also trading above its 50-day moving average, while the MACD indicator shows a positive reading. Therefore, we anticipate Qualcomm’s stock to remain in an uptrend in the near term.
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