Qualcomm’s Latest Forecasts Show Mixed Signals
Qualcomm has recently shared its projections for the third quarter, indicating revenues that could fall below analysts’ expectations. Despite this, CEO Cristiano Amon’s optimistic outlook about the recovery of its smartphone sector and opportunities in data centers helped boost the company’s stock by 15% in after-hours trading.
In a conversation with Reuters, Amon expressed confidence that the smartphone market is poised for a rebound after this fiscal quarter. He noted, “We can now call the bottom,” highlighting how the company’s licensing division exceeded expectations, offering valuable insights into smartphone manufacturers’ upcoming plans.
This year, Qualcomm has faced considerable challenges with smartphone makers, as rising memory chip prices have increased costs for smartphones and PCs, leading to reduced purchases from consumers.
For the current quarter, Qualcomm anticipates revenues of between $9.2 billion and $10 billion, which is below the expected $10.27 billion. As one of the top semiconductor firms for smartphones, Qualcomm serves major clients, including Apple and Samsung, along with various Chinese brands.
The company’s extensive involvement in consumer electronics, including chips for wireless headphones and automotive systems, makes its performance a key indicator of market health.
Additionally, Qualcomm projected an adjusted profit for the third quarter at between $2.10 and $2.30 per share, which also falls short of the anticipated $2.45.
Exploring Data Center Opportunities
On a promising note, Qualcomm is venturing into the booming data center chip market, with plans to start shipping products by the end of the year. According to Amon, the company is working on three types of chips: central processing units (CPUs), accelerators for data inference, and custom chips known as ASICs. This market is currently thriving for competitors like Broadcom and Marvell.
Amon stated, “We have engagement on a custom ASIC, which was our goal when acquiring AlphaWave,” a semiconductor technology company, in a $2.4 billion deal last year.
As cloud providers ramp up their purchases of CPUs to shift from AI model training to deployment, the demand for chips capable of handling significant workloads continues to grow. Bob O’Donnell, president of TECHnalysis Research, remarked that the cloud sector is maturing in its strategy and offerings.
Qualcomm’s shift to data center initiatives comes as competitors like Samsung and Apple increasingly focus on manufacturing their own chips. According to CFO Akash Palkhiwala, for fiscal year 2027, expected revenue from Apple’s products could register around $2 billion for Qualcomm’s chip segment.
Lastly, Qualcomm estimates its chip revenue for the third quarter will be between $7.9 billion and $8.5 billion, again below analysts’ expectations of $8.93 billion.
