Qualcomm beats estimates but warns of turbulence ahead
Qualcomm reported a $10.9 billion revenue for its second fiscal quarter ending March 2025, exceeding Wall Street’s expectations with a 17% rise. Adjusted earnings per share were $2.85, above consensus.
The boost came from its QCT unit, which raked in $9.5 billion. The mobile handset segment generated $6.93 billion, up 12%, while automotive chips soared 59% to $959 million. The Internet of Things segment posted $1.58 billion. However, the licensing arm, QTL, remained flat at $1.32 billion.
Despite the quarterly win, Qualcomm’s forecast for Q3 revenue is between $9.9 billion and $10.7 billion, with the midpoint at $10.3 billion, causing investor concern. The company attributed its gloomy outlook to macroeconomic issues and trade chaos, particularly tariff threats that could impact demand and supply lines. With 66% of its revenue tied to China, the risk is significant.
Another concern is Apple’s planned phase-out of Qualcomm modems by 2027. Apple currently accounts for over 20% of Qualcomm’s revenue. Qualcomm’s chief financial and operating officer, Akash Palkhiwala, noted that the share of Qualcomm’s revenue from Apple products is expected to decrease in future launches.
Qualcomm’s reliance on Apple and the volatile smartphone market has made investors jittery. The flatlining of QTL suggests that Qualcomm’s licensing scheme may be losing its effectiveness, possibly due to sagging demand or regulatory issues.