TLDR
- Qualcomm stock closed at $173.19, up 5.33%, then fell about 8% after hours.
- Q4 EPS of $2.17 and revenue of $10.32 billion beat estimates.
- Q1 EPS guidance midpoint of $2.25 missed the $2.32 target.
- Chip-design margin is guided to 20% to 22%, down from 24%.
- Automotive sales jumped 89% to $2 billion.
Qualcomm (QCOM) stock closed Wednesday at $173.19, up 5.33%. After the bell, it gave all of that back and then some, falling about 8%.
It was a day of two moods. The morning brought a deal and the evening brought a cost warning.
The good news came first. Qualcomm will supply SpaceX with its Dragonwing cellular infrastructure platform, which will support Starlink’s push into a terrestrial network.
Then came fiscal fourth-quarter results. Adjusted EPS was $2.17, a penny above the $2.16 estimate.
Revenue was $10.32 billion, ahead of the $10.12 billion Wall Street expected. A year earlier, Qualcomm posted EPS of $3 and revenue of $11.27 billion.
The Cost Squeeze Behind the Drop
The outlook is what moved the stock. Qualcomm sees first-quarter adjusted EPS between $2.15 and $2.35, with a midpoint of $2.25.
Analysts were looking for $2.32. Revenue guidance of $10.4 billion to $11.2 billion did land above the $10.6 billion midpoint they wanted.
Margins are the sore spot. Qualcomm expects a 20% to 22% operating margin in its chip-design segment, down from 24% last quarter.
The company blamed higher input costs. It named wafer fabrication, assembly, test, advanced packaging and memory.
Qualcomm is raising its own prices to cover the gap. The full benefit will not reach the bottom line until the second half of fiscal 2027.
Autos Climb While Handsets Lag
Qualcomm’s QCT segment, which covers handsets and autos, brought in $9 billion. That beat the $8.8 billion forecast, though it was down 8% from last year.
Handset revenue fell 26% to $5.1 billion, short of the $5.3 billion analysts projected. Counterpoint Research says global smartphone shipments dropped 19% in the third quarter.
Autos went the other way. Sales rose 89% to $2 billion, topping the $1.7 billion estimate.
Internet-of-things revenue grew 4% to $1.9 billion. The licensing unit, QTL, added $1.3 billion.
Apple remains a factor, with fewer than 20% of its new phones now using a Qualcomm modem. Qualcomm also repeated its goal of $5 billion in data center revenue in fiscal 2027, and it has said its custom chips will carry lower gross margins.
Arm Holdings had its own twist on the day. Its stock fell 5.3% in regular trading, then rose 0.6% after it posted EPS of 52 cents on $1.44 billion in revenue, both above estimates.
Qualcomm also has other deals in motion. It is working with Anduril on a laptop line called BlueChip, and in September it signed a custom chip agreement with Amazon.
Overnight trading showed Qualcomm at $157.91, down 8.82%.
