The company's handset business experienced a sharp 26% revenue contraction to $5.14 billion, pulling total chip segment sales down 8% to $9.02 billion. While surging data-center demand is straining memory supplies and raising input costs across the sector, CEO Cristiano Amon noted that Android demand is improving sequentially and the company anticipated component shortages early. Long-term initiatives in automotive and server processors are expanding, but near-term earnings remain challenged. Qualcomm currently trades at 16.78 times forward earnings, retaining a valuation discount against rivals like MediaTek and Intel.
Key points
Rising memory costs driven by broader artificial intelligence infrastructure investments…: Rising memory costs driven by broader artificial intelligence infrastructure investments are negatively impacting near-term profit margins.
Qualcomm is attempting to offset the loss of Apple revenue through strategic expansion in…: Qualcomm is attempting to offset the loss of Apple revenue through strategic expansion into data-center and automotive markets.
The company trades at a forward earnings multiple of 16.78, remaining significantly lower…: The company trades at a forward earnings multiple of 16.78, remaining significantly lower than key peers like Intel and MediaTek.
Sources checked by our analysis pipeline: 1
If losses hold, Qualcomm is on track to shed over $17 billion in market value.
* The chipmaker has been caught between rising memory costs fueled by surging data-center demand and slowing smartphone sales, as AI infrastructure spending absorbs supply across the semiconductor industry
* "Unlike some other companies, we saw the memory shortage coming and prepared for it early," CEO Cristiano Amon told Reuters
* Android demand showed sequential improvement and the company was making solid progress in expanding beyond its handset business, he added
* Qualcomm's push into data-center and automotive chips has strengthened its long-term growth outlook, but brokerages broadly said the improved visibility was yet to translate into stronger near-term earnings as the Apple revenue roll-off and higher input costs continue to weigh on results
* "We lack conviction in a three-year ramp in a target-rich environment for AI semis, and it's unclear whether a foundation built on custom chips has legs as the business transitions to merchant solutions," analysts at Morgan Stanley said
* Quarterly revenue from the chipmaker's handset division, its largest business, fell…
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