Qualcomm Inc. announced on Wednesday that its projected sales and profit for the upcoming quarter are expected to surpass Wall Street’s estimates, largely driven by an increase in Chinese smartphone launches. Following this announcement, Qualcomm’s stock rose 5.5% in after-hours trading, adding to a 12% surge earlier after it also unveiled a new $15 billion stock buyback program. This performance signals a recovery in the smartphone market as consumers upgrade to devices with artificial intelligence capabilities, such as chatbots and image generators, fueled by Qualcomm’s dominant role in smartphone chip production.
Qualcomm, based in San Diego, derived 46% of its revenue last fiscal year from Chinese customers. During a post-earnings call, the company downplayed concerns that the recent uptick in Chinese sales was linked to potential tariffs suggested by U.S. President Donald Trump, who was re-elected on Tuesday. Qualcomm executives stated that they did not see looming tariffs as a contributing factor to increased sales. Trump’s proposed tariffs range from a 10-20% blanket rate on most imports to a 60% rate on Chinese goods, intended to boost U.S. manufacturing. However, analysts, like CFRA’s Angelo Zino, cautioned that these policies pose risks to the semiconductor industry.
For its fiscal first quarter, Qualcomm forecasts midpoint sales of $10.90 billion and adjusted earnings of $2.95 per share, surpassing Wall Street’s expectations of $10.59 billion in revenue and $2.86 per share, according to LSEG data. Qualcomm’s fiscal fourth-quarter results, ending on Sept. 29, also exceeded estimates, reporting $10.24 billion in revenue and adjusted earnings of $2.69 per share, while analysts had anticipated $9.91 billion and $2.56 per share.
Despite the positive forecast, investors remain cautious regarding Qualcomm’s future revenue from Apple Inc., as Apple works to develop its own modem chips. Qualcomm’s current agreement to supply chips to Apple extends through at least 2026, but there is uncertainty over how quickly Qualcomm’s expansion into sectors like laptops and data centers for artificial intelligence will offset an expected decline in Apple-related revenue.
New flagship phone launches by Chinese brands, including Xiaomi, Oppo, and Vivo, contributed to Qualcomm’s promising forecast, according to Rosenblatt Securities’ Kevin Cassidy. Qualcomm also signed a licensing deal with Shenzhen-based Transsion Holdings, which manufactures phones for emerging markets, further strengthening its foothold in Asia.
Meanwhile, Qualcomm faces a legal challenge with Arm Ltd., whose technology is integral to Qualcomm’s flagship products. Arm recently threatened to revoke a key license, and a trial is scheduled for December.
For its chip division, Qualcomm forecasts first-quarter sales with a midpoint of $9.3 billion, exceeding analyst projections of $9.02 billion, as per Visible Alpha. Its patent-licensing business is projected to generate $1.55 billion, slightly above the $1.51 billion analyst estimate.
