Qualcomm’s earnings forecast beats estimates amid AI push and stock declines

By Stephen Nellis and Max A. Cherney

(Reuters) – Qualcomm forecast on Wednesday that second-quarter fiscal profit will be slightly above Wall Street estimates and revenue will be in line with market expectations, as a new line of AI-enabled chips push the company out of the last year’s smartphone slump will help.

The sales outlook reflects a surge in purchases of new Qualcomm chips with features designed to run chatbots, image generators and other artificial intelligence features directly on a device rather than in cloud computing data centers.

Qualcomm shares initially rose sharply in after-hours trading, but then reversed course and fell 2%.

Qualcomm forecast revenue and adjusted earnings with a midpoint of $9.30 billion and $2.30 per share for the current fiscal second quarter ending in March. The outlook is in line with analyst estimates of $9.30 billion and $2.25 per share, according to LSEG data.

In addition to the results, the company said on Wednesday that it has signed a chip supply agreement with Samsung to supply chips for its flagship Galaxy S24 globally.

On the patent front, Qualcomm said Apple had extended a licensing deal through March 2027. Qualcomm said in September it had signed a deal to supply Apple with chips through 2026, but noted that part of a patent deal with the iPhone maker was closed in the wake of a The great antitrust battle was set to end next year.

For Qualcomm, “5% revenue growth and 24% earnings growth is very constructive in a skeptical earnings season,” said Thomas J. Hayes of Great Hill Capital.

Qualcomm is the largest supplier of chips to a smartphone market that saw its worst sales year in a decade in 2023. As the smartphone industry slowly recovers, Qualcomm…

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