Shares in Qualcomm Inc (NASDAQ:QCOM), a leading chip supplier for smartphones and the auto sector, were heading lower in pre-market trading on Thursday despite reported strong earnings and outlined plans for expansion into AI-enabled chips, personal computers, and automotive technology.
Results for the company’s fiscal first quarter, released after the previous day's closing bell, exceeded expectations with earnings per share of $2.75, up 16% year-on-year and surpassing the average Wall Street estimate of $2.37.
Sales of $9.92 billion were up 5% on the same time a year earlier, outpacing the estimated $9.52 billion.
Qualcomm’s strong performance was fueled by robust handset sales, marking the end of a multi-quarter cycle of inventory sell-off and demand slowdown.
The automotive sector played a pivotal role, delivering record results and indicating a prosperous long-term outlook with a $30+ billion design pipeline. Qualcomm's strategic diversification into extended reality (XR), augmented reality (AR), and virtual reality (VR) is viewed positively, with partnerships with Samsung and Google positioning Qualcomm to capture a substantial market share.
Despite a soft Internet of Things (IoT) business, Qualcomm anticipates sequential growth, aligning with expectations. The company's fiscal second-quarter profit forecast slightly exceeded Wall Street estimates, with sales projected to reach a midpoint of $9.3 billion and adjusted profit of $2.30 per share.
Shares of Qualcomm fluctuated in afterhours trading on Wednesday. The following morning it was trading at $146.30, a 1.5% fall on the previous close, having last month approached a two-year high above $157.
Analysts at Saxo Bank saw the earnings and outlook as beneficial to the wider market picture, "suggesting many key sectors were improving from cars to smartphones".