Key facts
- Qualcomm forecasts Q4 adjusted profit per share between $2.05 and $2.25, missing analyst estimates of $2.36.
- The company anticipates an accelerated revenue decline from Apple due to supply constraints impacting its iPhone component share.
- Qualcomm plans to implement double-digit price hikes starting September 1 to offset rising costs for memory, wafers, and packaging.
- Third-quarter revenue decreased 4% year-over-year to $9.95 billion, surpassing estimates, while adjusted profit was $2.21 per share, slightly below consensus.
- Analysts expressed concern over near-term profit growth due to cost pressures and the time needed for diversification into AI and data centers.
Qualcomm shares declined in premarket trading after the chipmaker issued a weak profit forecast for the current quarter and warned that revenue from Apple would fall at an accelerated pace. The company cited rising costs for memory, wafers, packaging, and testing, which are impacting margins despite plans for double-digit price increases starting September 1.
For the fourth quarter, Qualcomm projected adjusted earnings per share between $2.05 and $2.25, significantly below the average analyst estimate of $2.36. Revenue is expected to be between $9.7 billion and $10.5 billion, also missing the consensus of $10.02 billion. The company indicated that its modem share in the upcoming iPhone will be materially lower than its previous 20% estimate, suggesting a faster contraction in its Apple business than anticipated.
Analysts noted that while Qualcomm plans to pass on cost increases, the benefits will emerge gradually, and margins will remain under pressure in the near term. Some analysts expressed caution about the diversification into AI and data centers, suggesting this strategy will take time to materialize and that initial data center programs carry lower margins. At least six analysts reduced their price targets on Qualcomm's stock following the forecast.
In the third quarter, Qualcomm's revenue fell 4% year-over-year to $9.95 billion, exceeding estimates of $9.67 billion. Adjusted profit was $2.21 per share, slightly below the consensus estimate of $2.23 per share.