In This Article:
For its fiscal second quarter, AI chipmaker Qualcomm (QCOM) published top and bottom line figures that beat expectations: revenue of $10.84 billion (vs. estimates of $10.64 billion) and adjusted earnings of $2.85 per share (vs. estimates of $2.81). The semiconductor manufacturer's stock stumbles in Wednesday's after-hours trading on its weaker-than-expected third quarter guidance.
Moor Insights & Strategy founder, CEO, and chief analyst Patrick Moorhead comments on Qualcomm's exposure to trade tariffs, especially for its smartphone and automotive components.
To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here.
Join us now to help us sort through all of this is Patrick Morehead, More Inside strategy founder, CEO and chief analyst. Patrick, always good to see you. So we got the numbers, the initial reaction here in the after hours, stocks under some pressure, Patrick, but walk us through the report. What do you make of the results?
Yeah, so first off, uh, great quarter, right? They they beat on the top line, they beat on the bottom line. Uh, Android handsets look really good. Uh, automotive is still the juggernaut at a 59% growth. And then IoT, which likely will be the next major juggernaut for Qualcomm up 27%. Uh, I think what people are responding to right now is that even though they hit the midpoint of guidance, right? Uh, the the range was 9.9 to 10.7 on the forecast. Uh, analysts had 1033, which is, you know, splitting, splitting the goal posts, uh, to, you know, the left side slightly, but it looks to me like an over reaction and likely, um, unless there's said something on the call that that skews it one way or another, um, you can't look at this and and say anything but good quarter and forecast.
Um, Patrick, how should we think about uh, Qualcomm's tariff exposure, especially given some of the exemptions that are in place?
Yeah, so first off, uh, there's direct and indirect tariffs, right? Direct would be uh, chips made overseas that are brought into the United States for final assembly. And that is very, very small. It is an infintesimal amount. Uh, and then there is the uh, potential for um, an escalation or or I would say the Trump administration saying, no, smartphones that are pulled in from Vietnam, uh, China and other places in the United States, uh, are are no longer exempt. And that could possibly, uh, be something in the future, but you know, if you're Qualcomm, you know, you certainly can't play a worst case card into that. But right now, they they look pretty good. Uh, there is, you know, there has been talk about, well, what if China retaliates? Uh, the challenge with China is they need Qualcomm uh, for their smartphones because China can't build enough smartphone processors in China that hit that uh, high performance, uh, high quality mark to satisfy the Chinese consumers. So, even though they do sell a lot into China, uh, China needs Qualcomm.
