Qualcomm sinks despite blowout smartphone chip sales

Qualcomm reported quarterly earnings per share and revenue growth that surpassed every analyst’s estimate, but the after-hours pop in the stock quickly faded and shares turned negative.

Mediocre guidance from peer Arm Holdings, which also reported after the close, may be weighing on companies in the space.

Qualcomm’s outlook for the current quarter was also better than expected for both the top and bottom lines.

While Qualcomm is purportedly diversifying away from smartphone chip sales, that part of its business is still its most important and was integral to these impressive results. Revenues from its handset division were $7.57 billion, more than $500 million above the consensus forecast.

“We are very pleased to have achieved quarterly revenue records, which reflect the strength of our technology, product roadmap, and end-customer demand,” Cristiano Amon, CEO of Qualcomm Incorporated, said. “We are delivering growth across our diversification initiatives and remain committed to executing on our fiscal 2029 targets to achieve $22 billion of non-handset revenues.”

We’ve long flagged the seeming divide in chips between strong demand for AI data centers and weak demand pretty much everywhere else, and this report is a bit of a narrative-buster in that regard.

It’s particularly surprising because Apple, which reported disappointing iPhone sales in Q4, is a key customer for Qualcomm (though it has plans to move away from the chipmaker in favor of its own semiconductors).

The company, which also has high exposure to the Chinese market, may face some challenges going forward given the trade frictions between the world’s two largest economies.