Qualcomm (NASDAQ: QCOM) is a multinational tech firm that manufactures wireless telecommunication equipment and semiconductors. On Wednesday, February 5, 2025, the company released its first quarter fiscal 2025 results to a negative market reaction despite beating estimates. Here is a deep dive into the Q1 results.
Qualcomm Q1 Fiscal 2025 Results
For the first quarter of fiscal 2025, Qualcomm reported revenue of $11.67 billion, beating estimates of $10.93 billion, an increase of 18% year-over-year. GAAP net income was up 15% YoY to $3.18 billion for a GAAP EPS of $2.83. it reported a non-GAAP EPS of $3.41, beating estimates of $2.96, a 24% YoY increase.
Segment Performance And Revenue Streams
The company’s QCT division, which oversees its wireless chipsets, and software solutions reported revenue of 10.08 billion, an 20% YoY increase, while its QTL division, which oversees IP licensing reported revenue of $1.54 billion, a 5% YoY increase.
Under the QCT division, handsets remain the biggest source of revenue at $7.56 billion, a 13% YoY increase. However, the best performer in the division was Automotive, which saw a 61% YoY jump in revenue to $961 million. The IoT segment also saw a significant 36% YoY increase in revenue to $1.55 billion.
Return Of Capital
Qualcomm announced it had bought back $1.8 billion worth of shares in the first quarter and paid a dividend totaling $942 million. In total, Qualcomm returned $2.7 billion to shareholders during the quarter.
Outlook
For the upcoming quarter, Qualcomm expects revenue of $10.2 billion to $11 billion, beating estimates of $10.34 billion at the midpoint. It is expecting an adjusted EPS of $2.70 to $2.90, which is above estimates of $2.69 at the midpoint.
Earnings Call Highlights
During the earnings, Qualcomm CFO Akash Palkhiwala said they had seen a rise in demand for “premium devices” in China. He added that customers for their smartphone chips were gaining market share in China, which would translate well for the company’s future.
Company CEO Cristiano R. Amon said that they had seen exceptional growth, in their car, IoT, and computer segments. According to, their non-handset revenue streams are expected to deliver revenue of $22 billion by 2029.
During its recent investors day in New York, the company revealed it expects to get $8 billion from its automotive segment, following partnerships with brands like BMW, seeking to increase the computational capabilities of their cars.
The company also expects to generate $14 billion from its IoT segment, which includes PCs. Qualcomm expects to generate $4 billion from PCs alone. Its Snapdragon X Elite chips already power Microsoft’s latest Surface laptops, which feature the Copilot AI assistant.
Investor Skepticism About Qualcomm’s PC Push
Following the earnings call, investors’ skepticism pushed Qualcomm’s shares over 4% lower in pre-market trading. One reason for this is that Qualcomm’s PC push will be coming up against x86 and ARM SoC suppliers for Windows PCs.
The company’s Windows-on-ARM entry will be met with stiff competition for its emerging tech. Additionally, it will have to build market share in a PC market that is considered mature.
Additionally, the company will have to contend with the departure of Apple, one of its biggest customers, which recently announced it is moving away from Qualcomm modems.
Qualcomm Stock Performance
QCOM shares fell 4.09% in premarket trading to $168.67 per share as of 6:41 AM EST. The stock is up 11.34% in the past six months, and 22.10% in the past 12 months. It has underperformed the S&P 500, which is up 16.87% in the past six months, and 22.24% in the past 12 months.
Analysts are cautiously optimistic about the future of QCOM, giving its moderate buy rating. They forecast an average price of $198.15, which is a 12.67% upside. Their top price forecast is $250, While the lowest is $150.
Is Qualcomm Headed For A Quantum Leap?
Qualcomm has seen sustainable growth in its newest segments as it seeks to diversify its revenue stream. It is betting big on its entry into the PC markets with Windows-on-ARM. The company has already made efforts in the AI and automotive industries. Coupled with its entry into the 5G industry, the coming years look promising for QCOM.
Consequently, while there might be some short-term growing pains as the company realigns its operations, QCOM’s long-term performance could potentially deliver wins for your portfolio.
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