Qualcomm’s second quarter performance aligned with Wall Street’s revenue expectations but was met with a notable negative market reaction. Management attributed growth to strong execution in its automotive and Internet of Things segments, with each posting over 20% year-on-year gains. The handset business benefited from premium-tier launches and expanded collaborations, though management acknowledged a slightly weaker product mix compared to expectations. CEO Cristiano Amon emphasized the momentum in AI-powered devices, citing increased adoption of Snapdragon platforms in both smartphones and PCs. Despite these operational achievements, investor concerns were evident in the market’s response, reflecting a cautious outlook amid shifting end-market dynamics.
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Qualcomm (QCOM) Q2 CY2025 Highlights:
- Revenue: $10.37 billion vs analyst estimates of $10.35 billion (10.3% year-on-year growth, in line)
- Adjusted EPS: $2.77 vs analyst estimates of $2.71 (2.1% beat)
- Adjusted EBITDA: $3.97 billion vs analyst estimates of $3.91 billion (38.3% margin, 1.6% beat)
- Revenue Guidance for Q3 CY2025 is $10.7 billion at the midpoint, above analyst estimates of $10.61 billion
- Adjusted EPS guidance for Q3 CY2025 is $2.85 at the midpoint, above analyst estimates of $2.82
- Operating Margin: 26.6%, up from 23.6% in the same quarter last year
- Inventory Days Outstanding: 163, up from 144 in the previous quarter
- Market Capitalization: $165.9 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Qualcomm’s Q2 Earnings Call
- Joshua Louis Buchalter (TD Cowen) pressed for clarity on what is driving handset growth despite lower Apple share. CFO Akash Palkhiwala replied that new flagship product launches and OEM preparations for upcoming devices are the main contributors.
- Samik Chatterjee (JPMorgan) asked about Alphawave integration and customer selection for data center expansion. CEO Cristiano Amon explained the focus on leveraging Alphawave’s connectivity IP and targeting hyperscalers with custom ARM-compatible solutions.
- Stacy Aaron Rasgon (Bernstein Research) questioned expectations for seasonality in the December quarter amid changing Apple dynamics. Palkhiwala responded that normal revenue seasonality should be expected, with adjustments for reduced Apple volumes.
- Ross Clark Seymore (Deutsche Bank) inquired about Qualcomm’s share in Samsung devices and competitive positioning versus Samsung’s own processors. Amon confirmed a baseline share of 75% for Galaxy S devices, with upside potential depending on future launches.
- Tal Liani (Bank of America) sought to understand the risk and outlook for China handset revenues and internal competition. Palkhiwala emphasized the strength of Qualcomm’s relationships with Chinese OEMs, particularly Xiaomi, and highlighted diversification across multiple device categories.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the commercial impact of new Snapdragon-powered flagship device launches and their adoption rates, (2) progress on closing the Alphawave acquisition and early customer wins in data center and AI inference markets, and (3) sustained growth in automotive and IoT revenues as new products and partnerships come to market. Execution against operating expense discipline and expansion into personal AI devices will also be important indicators of future performance.
Qualcomm currently trades at $153.75, down from $158.96 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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