Key Takeaways QCOM's Q3 non-GAAP EPS of $2.77 beats estimates, driven by strong IoT and automotive demand.Automotive revenue hit a record $984M, up 21% on Snapdragon Digital Chassis adoption.QCT revenue rose 11% to $8.99B, fueled by premium handset gains and solid EDGE networking traction.Qualcomm Incorporated (QCOM) reported relatively robust third-quarter fiscal 2025 results, with adjusted earnings exceeding the Zacks Consensus Estimate, driven by healthy demand trends in IoT and automotive businesses. Ho ...

Core Insights - Qualcomm is set to report its third-quarter fiscal 2025 earnings on July 30, 2025, with revenue and earnings estimates at $10.36 billion and $2.68 per share respectively [1] - The earnings estimate for fiscal 2025 has decreased by 0.26% over the past 60 days, while the estimate for fiscal 2026 has declined by 1.99% [1] Earnings Performance - Qualcomm has a four-quarter earnings surprise average of 6.43%, having beaten estimates in each quarter, with the last reported quarter showing a surprise of 0.71% [3][4] Earnings Predictions - The company has a positive Earnings ESP of +0.60% and a Zacks Rank of 3, indicating a likelihood of an earnings beat for the upcoming quarter [5][6] Recent Developments - Qualcomm launched the Snapdragon 7 Gen 4 Mobile Platform, enhancing AI performance and gaming capabilities, which has gained traction among leading OEMs like HONOR and vivo [7][8] - The company has been selected by e& to enhance digital infrastructure in the UAE and is involved in Saudi Arabia's Vision 2030 initiative, focusing on AI and 5G technologies [9] - Recent acquisitions include Autotalks for V2X technology, MovianAI for generative AI capabilities, and a definitive agreement to acquire Alphawave Semi for approximately $2.4 billion, aimed at enhancing AI capabilities [10][11] Market Performance - Over the past year, Qualcomm's stock has decreased by 10.3%, underperforming the industry growth of 41%, while competitors like Broadcom have seen significant gains [12] Valuation Metrics - Qualcomm's shares are trading at a forward P/E ratio of 13.44, which is lower than the industry average of 34.13 and below its historical mean of 16.97, indicating a relatively cheaper valuation [13] Strategic Focus - The company aims to lead in AI innovation through strategic acquisitions and R&D initiatives, targeting various industries including smartphones and automotive [16] - Qualcomm is experiencing strong demand in the premium handset market but faces margin pressures in the mid-range segment due to competition from low-cost chipmakers [17] Competitive Landscape - Despite challenges, Intel remains a significant competitor in chipset development, particularly in the AI PC sector, which could impact Qualcomm's expansion in that area [18] Long-term Outlook - While current earnings estimates show bearish sentiment, Qualcomm's focus on AI initiatives and diversification of its portfolio positions it well for long-term growth, particularly in high-end smartphones and IoT [20]

Core Viewpoint - Qualcomm is undergoing a significant transformation, diversifying its business beyond the smartphone market, which is expected to yield substantial growth in sectors like automotive technology, AI-powered PCs, and IoT [2][3][15] Automotive Sector Growth - Qualcomm's automotive revenues reached $959 million in Q2, marking a 59% increase year-over-year, positioning this segment as a primary growth driver [4] - The Snapdragon Digital Chassis platform is crucial for this growth, providing solutions for digital cockpits, in-car connectivity, and ADAS, making Qualcomm a key technology partner in modern vehicles [5] - The acquisition of Autotalks enhances Qualcomm's portfolio with V2X communication technology, supporting future autonomous driving and road safety systems [6] - Long-term automotive design wins are expected to provide stable revenue streams, aiming for $8 billion in annual automotive revenue [7] IoT and AI Expansion - The IoT segment grew 27% year-over-year to $1.6 billion in Q2, facilitating entry into new device categories, particularly AI PCs [8] - Snapdragon X Elite processors are positioning Qualcomm as a competitor in the AI PC market, offering advantages in power efficiency and on-device AI processing [8] - In Q1 2025, Snapdragon-powered devices captured approximately 9% of the premium Windows laptop market in the U.S. and key European countries [9] Strategic Acquisitions and Partnerships - Qualcomm's acquisition of Alphawave Semi for approximately $2.4 billion aims to enhance high-speed connectivity technology, facilitating entry into the AI-driven data center market [10] - New partnerships in industrial IoT reflect a strategy to integrate Qualcomm's technology into the connected economy [10] Upcoming Earnings Report Insights - The upcoming Q3 earnings report is anticipated to validate Qualcomm's diversification strategy, with a focus on automotive and IoT revenue growth [11][12] - Key metrics to watch include year-over-year revenue growth in automotive and IoT, QCT handset margins, and management's outlook on design-win pipelines [12] Financial Performance and Market Sentiment - Qualcomm's trailing P/E ratio is approximately 16, suggesting the market may not fully account for its high-growth revenue streams [13] - Analysts have a consensus price target near $185, indicating a potential upside of over 15% from the current price [14] - The company offers a dividend yield of around 2.25% and plans to return 100% of its free cash flow to shareholders in fiscal 2025, reflecting confidence in its long-term cash-generating capabilities [14]

Core Viewpoint - There is a notable disconnect between Wall Street's perception of Qualcomm and its actual performance, suggesting potential investment opportunities as the company shows strong operational results despite a consensus Hold rating from analysts [1][15]. Financial Performance - Qualcomm's diversification into high-growth sectors beyond smartphones is yielding significant financial growth, indicating that the current stock price may not fully reflect its balanced business model [2][16]. - The automotive division has seen a substantial revenue increase of 59% year-over-year, reaching $959 million, driven by the adoption of the Snapdragon Digital Chassis platform [4]. - The Internet of Things (IoT) segment has also emerged as a growth engine, with revenue climbing 27% year-over-year to $1.58 billion, fueled by industrial applications [6]. Future Growth Catalysts - Qualcomm is launching a major push into the personal computer market with its Snapdragon X Elite and X Plus processors, which could significantly enhance future revenue streams [8][9]. - The automotive design-win pipeline exceeds $45 billion, indicating a strong future revenue stream from this segment [5]. Valuation and Dividend - Qualcomm's stock trades at a trailing P/E ratio of approximately 16.50, which is considered attractive compared to the industry average of 57, suggesting a potential undervaluation [12]. - The company offers a dividend yield of 2.20%, supported by a sustainable payout ratio of 36%, providing direct cash returns to shareholders [10][14]. Strategic Outlook - Qualcomm's leadership is focused on reducing dependence on any single customer, particularly in light of potential risks associated with its relationship with Apple [11]. - The company's successful transformation and diversification strategy present a compelling investment case, challenging the current market sentiment [16].

Core Viewpoint - Qualcomm Incorporated (QCOM) reported strong second-quarter fiscal 2025 results, with adjusted earnings and revenues exceeding expectations due to robust demand in Android handsets, automotive, and IoT sectors [1] Financial Performance - GAAP net income for the March quarter increased to $2.81 billion or $2.52 per share, up from $2.33 billion or $2.06 per share year-over-year, primarily driven by top-line growth [2] - Non-GAAP net income was $3.17 billion or $2.85 per share, compared to $2.76 billion or $2.44 per share in the previous year, beating the Zacks Consensus Estimate by 2 cents [3] - Total GAAP revenues for the fiscal second quarter reached $10.98 billion, an increase from $9.39 billion in the prior-year quarter [3] - Non-GAAP revenues were $10.84 billion, up from $9.34 billion a year ago, surpassing the consensus estimate of $10.67 billion [4] Segment Results - Qualcomm CDMA Technologies (QCT) revenues rose to $9.47 billion from $8.03 billion, driven by strong performance in automotive and IoT businesses, exceeding revenue estimates of $9.19 billion [5] - Automotive revenues surged 59% year-over-year to $959 million, supported by increased content in new vehicle launches with the Snapdragon Digital Chassis platform [6] - Handset revenues increased 12% year-over-year to $6.93 billion, benefiting from higher premium-tier Android shipments [7] - IoT revenues grew 27% year-over-year to $1.58 billion, driven by demand for connectivity, processing, and AI technologies [7] - Qualcomm Technology Licensing (QTL) revenues remained flat at $1.32 billion, matching estimates, with an EBT margin decline to 70% from 71% [7] Cash Flow & Liquidity - Qualcomm generated $7.14 billion in net cash from operating activities in the first half of fiscal 2025, compared to $6.5 billion a year ago [8] - At the end of the quarter, the company had $7.2 billion in cash and cash equivalents and $13.3 billion in long-term debt [8] - The company repurchased 11 million shares for $1.7 billion during the quarter [8] Q3 Guidance - For the third quarter of fiscal 2025, Qualcomm expects GAAP revenues between $9.9 billion and $10.7 billion, with GAAP earnings projected at $2.14 to $2.34 per share [10] - Non-GAAP earnings are anticipated to be between $2.6 and $2.8 per share, with QTL revenues expected to be $1.15 billion to $1.35 billion and an EBT margin of 67% to 71% [10] - QCT revenues are forecasted to be between $8.7 billion and $9.3 billion, with an EBT margin of 28% to 30% [10]