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Qualcomm Stock Jumps as AI-Equipped Smartphones Drive Better-Than-Expected Outlook

Key Takeaways

  • Qualcomm shares jumped more than 4% in extended trading on Wednesday after the mobile phone chipmaker issued a better-than-expected current-quarter outlook amid growing demand for AI-equipped premium smartphones.
  • The company reported a 40% jump in quarterly revenue from Chinese phone manufacturers.
  • Monitor how the Qualcomm share price responds to two twin peaks that formed in March and April around $176.

Qualcomm (QCOM) shares jumped more than 4% in extended Wednesday after the mobile phone chip giant posted strong earnings and a better-than-expected current-quarter outlook amid growing demand for artificial intelligence (AI)-equipped smartphones.

The company projects sales in the June quarter to range between $8.8 billion and $9.6 billion, with the $9.2 billion midpoint of that guidance above the $9.05 billion consensus. It sees earnings per share (EPS) for the period of between $2.15 and $2.35, topping the Wall Street forecast of $2.17 per share.

For the fiscal second quarter ending March 24, the San Diego, California-based company reported adjusted earnings of $2.44 per share, comfortably above estimates modeled by analysts at $2.32 a share. Revenue in the quarter of $9.39 billion improved 1% from the prior year’s corresponding quarter and topped the $9.34 billion Street expectation.

Strong Demand From China

While the company said it expects handset revenues to decline in the current quarter due to fewer smartphone launches over the summer months, it remains encouraged by strong demand for “premium tier” smartphones that require more advanced chips. It noted that revenue from Chinese phone manufacturers surged 40% from a year earlier.

“We have not seen signs of weakness in the Android premium market in China,” said Qualcomm CEO Cristiano Amon. “A lot of the strength is really coming from premium devices on Oppo, OnePlus, Vivo,” he added.

Amon also pointed out on the earnings call that next-generation handsets enabled with AI and generative AI are helping drive demand for premium smartphones. “We are seeing the very first instances of on-device AI and Gen AI being launched in premium devices and that is resonating well with the consumer.”

Price to Watch Amid Earnings-Driven Buying

Qualcomm shares have trended mostly higher since the 50-day moving average crossed above the 200-day moving average in early December last year to form a bullish golden cross signal. Last week’s retracement below the 50 MA found immediate buying interest, indicating underlying strength in the stock leading into the company’s quarterly results.

If the shares continue to move higher after Qualcomm’s better-than-expected earnings report, investors should monitor how the price responds to two twin peaks that formed in March and April around $176. A close above this level could potentially lead to a breakout above a multi-month uptrend line stretching back to late October.

Qualcomm shares rose 4.1% to $170.77 in after-hours trading. Through the close of trading Wednesday, the stock had gained about 41% over the past 12 months.

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As of the date this article was written, the author does not own any of the above securities.


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