Company Reports

Qualcomm reported fiscal third-quarter revenue of $9.95 billion, down 4% year over year but toward the high end of guidance. Qualcomm expects September-quarter revenue of $10.1 billion, down 10% year over year but in line with FactSet consensus estimates.

We expect Qualcomm’s chip business (QCT) and licensing business (QTL) to continue to generate healthy cash flow and reinforce the company’s narrow moat rating, as Qualcomm should remain an industry leader in chipsets and IP for 5G. Apple’s decision to build its own baseband chips, or modems, to displace Qualcomm will be a looming headwind, but not a death blow, especially as Qualcomm is transitioning into automotive, PC, Internet of Things, and data center processors.

We expect Qualcomm’s chip business (QCT) and licensing business (QTL) to continue to generate healthy cash flow and reinforce the company’s narrow moat rating, as Qualcomm should remain an industry leader in chipsets and IP for 5G. Apple’s decision to build its own baseband chips, or modems, to displace Qualcomm will be a looming headwind, but not a death blow, especially as Qualcomm is transitioning into automotive, PC, Internet of Things, and data center processors.

Qualcomm hosted an investor event focused on its emerging data center chip business. Qualcomm expects $40 billion in nonhandset chip revenue in fiscal 2029, with $18 in adjusted EPS. The firm forecasts $5 billion and $15 billion of data center revenue in fiscal 2027 and fiscal 2029, respectively.

Qualcomm reported fiscal second-quarter revenue of $10.6 billion, down 3% year over year and at the midpoint of guidance. Qualcomm expects June-quarter revenue of $9.6 billion at the midpoint of guidance, down 7% year over year and below FactSet consensus estimates.

We expect Qualcomm’s chip business (QCT) and licensing business (QTL) to continue to generate healthy cash flow and reinforce the company’s narrow moat rating, as Qualcomm should remain an industry leader in chipsets and IP for 5G. Apple’s decision to build its own baseband chips, or modems, to displace Qualcomm will be a looming headwind, but not a death blow, especially as Qualcomm is transitioning into automotive, PC, Internet of Things, and data center processors.

We expect Qualcomm’s chip business (QCT) and licensing business (QTL) to continue to generate healthy cash flow and reinforce the company’s narrow moat rating, as Qualcomm should remain an industry leader in chipsets and IP for 5G. Apple’s decision to build its own baseband chips, or modems, to displace Qualcomm will be a medium- to long-term headwind, but not a death blow, especially as Qualcomm is poised to grow in automotive and Internet of Things semis. In licensing, Qualcomm has withstood a host of government inquiries and customer pushback, and we think QTL will maintain a hearty stream of high-margin royalty revenue over time.

Qualcomm reported fiscal first-quarter revenue of $12.25 billion, up 9% sequentially, up 5% year over year, and just above the midpoint of guidance. Qualcomm expects March-quarter revenue of $10.6 billion at the midpoint, below FactSet consensus of $11.1 billion.

Qualcomm reported fiscal fourth-quarter revenue of $11.3 billion, up 10% year over year and above the high end of guidance. Revenue for the December quarter is expected to be $12.2 billion, which would be up 8% sequentially and 5% year over year.

Qualcomm unveiled its AI200 and AI250 chip cards and racks for artificial intelligence, aimed at the AI inference market. Saudi Arabia’s AI investment arm, Humain, agreed to deploy the AI200 and AI250 for 200 megawatts of data centers, starting in 2026.

We expect Qualcomm’s chip business (QCT) and licensing business (QTL) to continue to generate healthy cash flow and reinforce the company’s narrow moat rating, as Qualcomm should remain an industry leader in chipsets and IP for 5G. Apple’s decision to build its own baseband chips, or modems, to displace Qualcomm will be a medium- to long-term headwind, but not a death blow, especially as Qualcomm is poised to grow in automotive and Internet of Things semis. In licensing, Qualcomm has withstood a host of government inquiries and customer pushback, and we think QTL will maintain a hearty stream of high-margin royalty revenue over time.

Qualcomm reported fiscal third-quarter revenue of $10.4 billion, down 6% sequentially but up 10% year over year and above the midpoint of guidance. Qualcomm’s outlook for the September quarter calls for $10.7 billion of revenue, which would represent a deceleration to 4.5% year-over-year growth.

Qualcomm's fiscal second-quarter revenue grew 17% year over year and both revenue and earnings per share were at the high end of guidance. June-quarter guidance calls for a deceleration to 10% year-over-year growth and was slightly below FactSet consensus estimates. Shares fell about 6% afterhours.

We expect Qualcomm’s chip business (QCT) and licensing business (QTL) to continue to generate healthy cash flow and reinforce the company’s narrow moat rating, as Qualcomm should remain an industry leader in chipsets and IP for 5G. Apple’s decision to build its own baseband chips, or modems, to displace Qualcomm will be a medium- to long-term headwind, but not a death blow, especially as Qualcomm is poised to grow in automotive and Internet of Things semis. In licensing, Qualcomm has withstood a host of government inquiries and customer pushback, and we think QTL will maintain a hearty stream of high-margin royalty revenue over time.

Narrow-moat Qualcomm reported strong fiscal first-quarter results and provided investors with a decent outlook for the March quarter. Shares sold off about 5% after hours, perhaps out of concern that Qualcomm’s licensing business (QTL) will achieve flattish revenue in fiscal 2025 versus a year ago, although we’re not overly concerned with this slightly light forecast. We maintain our $180 per share fair value estimate and view shares as slightly undervalued.

We maintain our fair value estimates for wireless chipmakers under our coverage, given a Bloomberg report that Apple’s long-rumored development of an internal baseband chip, or modem, is imminent. Our fair value estimate for narrow-moat Qualcomm remains at $180, narrow-moat Skyworks Solutions at $95, and no-moat Qorvo at $85.

Narrow-moat Qualcomm’s investor day laid out revenue targets for its automotive and various Internet of Things product lines that were encouraging but largely in line with our prior expectations. We maintain our $180 fair value estimate and view shares as modestly undervalued. We still view Qualcomm as closely tied to the smartphone market for the next few years, but acknowledge that its efforts in auto and IoT, as highlighted in this event, will eventually drive Qualcomm to be a more diversified processor maker. We have no qualms with Qualcomm’s focus on these non-smartphone end markets.

We maintain our $180 fair value estimate for narrow-moat Qualcomm as the company reported strong fiscal fourth-quarter earnings and provided investors with an upbeat forecast for the December quarter. Shares appear fairly valued to us.

We maintain our $180 fair value estimate for narrow-moat Qualcomm and $66 fair value estimate for wide-moat Arm Holdings despite a report from Bloomberg suggesting that Arm, Qualcomm’s longtime and critical intellectual property supplier, has given Qualcomm a 60-day notice of cancellation of their joint architectural license. We’re still skeptical that a full cancellation of their licenses is the most likely outcome of their joint dispute, so we maintain our base case estimates for both firms.

We intend to maintain our $21 fair value estimate for no-moat Intel and $180 for narrow-moat Qualcomm following The Wall Street Journal's report on Sept. 20 that Qualcomm "made a takeover approach to rival Intel in recent days." No deal price was discussed in the report, and we agree with the Journal's assessment that there would be significant antitrust scrutiny around such a deal, so we're hesitant to believe that a bid to take over Intel that would appeal to Intel shareholders is imminent. Intel's shares rose 3% on Sept. 20 while Qualcomm fell 3%, perhaps signaling to the latter firm that Qualcomm shareholders might not be thrilled with such a takeover.