To The Moon

$Qualcomm(QCOM)$ is set to report its fiscal Q3 2025 earnings after the market closes on Wednesday, July 30, 2025. As a bellwether in the semiconductor and wireless technology space, QCOM's results will offer key insights into trends in smartphones, automotive, and IoT.

Earnings Per Share (EPS): Analysts project a solid quarter. The consensus EPS forecast is around $2.71 per share, representing a healthy increase of about 15% year-over-year.

Revenue: Revenue is expected to grow by approximately 10% to $10.3 billion.

Qualcomm (QCOM) reported its fiscal Q2 2025 earnings on April 30, 2025, for the quarter ended March 30, 2025. While the company delivered strong results that beat analyst expectations, the subsequent guidance for Q3 2025 caused the stock to dip.

Summary of Q2 2025 Earnings:

Top and Bottom Line Beat: Qualcomm reported non-GAAP (adjusted) revenue of $10.8 billion, an increase of 15% year-over-year, surpassing analyst estimates of approximately $10.6 billion. Non-GAAP diluted EPS came in at $2.85, up 17% year-over-year, also beating the consensus estimate.

Strong QCT Segment Performance: The Qualcomm CDMA Technologies (QCT) segment, which encompasses chipsets, saw revenues increase 18% to $9.5 billion. This growth was notably driven by:

Handsets: Revenue up 12% to $6.93 billion, reflecting strength in premium-tier Android shipments.

Automotive: Surged 59% year-over-year to $959 million, driven by increased content in new vehicle launches and strong traction for its Snapdragon Digital Chassis platform. Qualcomm secured 30 new designs during the quarter.

IoT (Internet of Things): Grew 27% year-over-year to $1.58 billion, fueled by demand for products integrating connectivity, processing, and AI technologies.

QTL Segment Stability: The Qualcomm Technology Licensing (QTL) segment, its high-margin patent licensing business, remained largely flat year-over-year at $1.32 billion, meeting expectations.

Shareholder Returns: Qualcomm continued its robust capital return program, returning $2.7 billion to shareholders during the quarter through $1.7 billion in share repurchases and $0.9 billion in dividends. They also increased their quarterly cash dividend.

AI Momentum: The company highlighted its leadership in on-device AI, noting the proliferation of smaller generative AI models and strong progress in its Snapdragon X-powered devices for AI PCs (over 85 designs in production/development).

Lessons Learned from the Guidance Given:

Despite the strong Q2 performance, Qualcomm's stock dropped following the earnings release primarily due to its Q3 2025 guidance, which came in below some analyst expectations.

Softer Q3 Outlook: For fiscal Q3 2025, Qualcomm projected non-GAAP revenues between $9.9 billion and $10.7 billion (midpoint $10.3 billion), and non-GAAP EPS between $2.60 and $2.80. While this represents continued growth year-over-year, the midpoint of the revenue guidance was slightly below some analyst estimates for the quarter.

Impact of Macro and Geopolitical Factors: Management attributed this slightly softer outlook to ongoing macroeconomic pressures and uncertainties related to U.S.-China trade dynamics. While direct tariff impacts were deemed not material, the broader environment creates caution.

Seasonality and Mix Shift: Commentary from the earnings call suggested normal seasonality in the QCT business (especially Android) and a potential mix shift towards lower-tier devices contributing to the slightly lower revenue outlook for Q3.

Lesson: Guidance Trumps Current Results: The primary lesson is that forward-looking guidance often dictates market reaction more than past performance, especially for semiconductor companies. Even strong current results can be overlooked if the outlook suggests a slowdown or increased headwinds. Investors prioritize future growth prospects and management's confidence in achieving them.

Lesson: Diversification is Key, but Macro Still Matters: While Qualcomm's diversification into automotive and IoT is clearly bearing fruit and showing strong growth, even these segments are not entirely immune to broader macroeconomic shifts or geopolitical tensions. The company's focus on these growth drivers remains crucial for its long-term strategy, but short-term results can still be influenced by external factors impacting overall demand.

Lesson: AI is a Long-Term Catalyst: Despite the Q3 guidance concerns, Qualcomm continued to emphasize its strong position in AI at the edge (on-device AI). This suggests that while near-term guidance might be cautious, the company sees AI as a significant long-term growth driver that they are actively investing in.

Qualcomm's Q2 2025 earnings demonstrated solid execution and successful diversification efforts. However, the market's reaction underscored the critical importance of future guidance, with investors quickly adjusting expectations based on management's cautious outlook regarding ongoing macroeconomic and geopolitical challenges.

Q3 2025 Earnings Outlook:

Prior Quarter Performance (Q2 2025): In its Q2 2025 report (ended March 30, 2025), Qualcomm surpassed expectations with adjusted EPS of $2.85 and adjusted revenue of $10.8 billion. However, the stock saw a significant drop (nearly 9%) the following day due to a weaker-than-expected revenue forecast for Q3 2025 (midpoint of $10.3 billion, which was below Wall Street estimates). This highlights that guidance is often more impactful than the reported numbers themselves.

Key Trends: The company has been diversifying beyond just smartphones, with growth in automotive and IoT. However, concerns about U.S.-China trade tensions, potential tariffs, and a slowdown in global demand for some segments remain.

Key Metrics Investors Should Watch:

Revenue by Segment:

QCT (Qualcomm CDMA Technologies - Chipsets): This is the core chip business. Look for growth, particularly in:

Handsets: Are smartphone sales rebounding globally, especially in the premium segment where Qualcomm's Snapdragon chips are strong? Commentary on Android demand and any progress with Apple (regarding modem supply) is crucial.

Automotive: This has been a high-growth area. Watch for continued strong growth in revenue from their Snapdragon Digital Chassis solutions. Q2 saw 59% YoY growth in automotive.

IoT (Internet of Things): Qualcomm aims for significant IoT revenue growth. Look for robust performance in industrial IoT, edge AI, and consumer IoT. Q2 saw 27% YoY growth in IoT.

QTL (Qualcomm Technology Licensing): This high-margin business generates royalties from Qualcomm's extensive patent portfolio. While often stable, any commentary on licensing agreements (e.g., with Huawei) or new challenges could move the stock.

Gross and Operating Margins: With increasing competition and ongoing global supply chain dynamics, maintaining or improving margins across segments is vital for profitability.

Earnings Per Share (EPS): Beyond the headline number, look at the non-GAAP (adjusted) EPS to understand the underlying operational performance.

Guidance for Fiscal Q4 2025 and Full Year 2025: This is often the most critical element.

What are their revenue and EPS expectations for the next quarter?

Any updates to their full-year outlook?

Commentary on overall market demand (smartphones, PCs, automotive), inventory levels, and geopolitical factors (U.S.-China relations) will heavily influence investor sentiment.

AI-related Commentary: Qualcomm is positioning its Snapdragon platforms for on-device AI. Listen for updates on design wins, customer adoption, and future opportunities in the AI PC and AI-enabled smartphone markets.

Qualcomm (QCOM) Price Target

Based on 30 analysts from Tiger Brokers offering 12 month price targets for Qualcomm in the last 3 months. The average price target is $177.50 with a high forecast of $225.00 and a low forecast of $140.00. The average price target represents a 10.53% change from the last price of $160.46.

Opportunity for Trading Short-Term Post-Earnings:

Mixed Historical Reaction: Qualcomm's stock reaction to earnings has been mixed. Over the past five years, a positive one-day return was seen only about 40% of the time, dropping to 17% in the last three years. When positive, the median gain was ~9.7%; when negative, the median drop was ~-5.3%. This suggests volatility, but not a consistently bullish immediate reaction.

Guidance is Key: As seen in Q2, even a beat on current numbers can lead to a sell-off if the forward guidance disappoints. Conversely, even modest current results could be met positively if the outlook is strong.

Analyst Sentiment: Analysts generally hold a "Buy" consensus rating, with some recent upgrades. They emphasize Qualcomm's relative valuation (P/E around 15x, lower than peers like $NVIDIA(NVDA)$ and $Advanced Micro Devices(AMD)$) and its diversification into automotive and IoT.

Implied Volatility: The options market will price in an expected move. Given past reactions, expect a decent implied volatility, suggesting a potential move of several percentage points.

Technical Analysis -Exponential Moving Average (EMA)

QCOM have been trading in consolidation recently and we saw a small breakout on Monday, and the momentum remain positive ahead of its earnings. We could be seeing investors sentiment increasing as AI demand remains a key part for QCOM business.

The bulls are in control on the daily uptrend, and I can see that the bulls would continue to make a daily uptrend continuation.

Potential Scenarios for Short-Term Trading:

Beat & Strong Guidance: If QCOM not only beats Q3 estimates but also provides Q4 and/or full-year guidance that exceeds analyst expectations (especially in handset recovery, automotive, or AI adoption), the stock could see a significant upward move. A short squeeze from analysts raising price targets could amplify this.

Beat & Weak/Conservative Guidance: This was the Q2 scenario. If Q3 numbers are good but the outlook remains cautious due to macro factors or specific segment weakness, the stock could pull back.

Miss & Weak Guidance: A miss on both current numbers and guidance would likely lead to a notable decline.

AI Catalysts: Strong commentary or specific announcements regarding AI on devices (AI PCs, next-gen smartphones) could provide an additional catalyst for a positive reaction, even if the overall numbers are just in-line.

Trading Considerations:

Risk Management: Earnings events are inherently volatile. Use proper risk management, including stop-loss orders, if engaging in short-term trading.

Options vs. Stock: Options offer leveraged exposure but decay rapidly post-earnings due to volatility crush. Direct stock purchases might be more suitable for those seeking a less leveraged, but still directional, play.

Focus on the Call: The management's commentary during the conference call (1:45 PM PT on July 30th) will be critical for understanding nuances behind the numbers and the forward outlook.

Summary

Qualcomm (QCOM) reports Q3 2025 earnings on July 30th. Investors will eye Handset, Automotive, and IoT chip revenue for signs of market recovery and diversification. Licensing (QTL) segment performance and gross margins are also key.

Growth in automotive and IoT segments is noted, with Q2 2025 automotive revenue up 59% and IoT up 27%. Despite concerns over trade tensions and demand slowdowns, analyst consensus leans towards a "Moderate Buy" rating.

Crucially, Q4 2025 guidance will drive the stock, as Q2 saw a dip despite a beat due to conservative outlook. Analysts expect EPS of $2.71 and revenue of $10.3 billion. QCOM's post-earnings reaction is mixed historically, but strong AI commentary or robust guidance could spark a rally.

I have entered a position on QCOM at around $157 as I foresee that QCOM earnings could provide a surprise anda much positive outlook guidance as well.

Appreciate if you could share your thoughts in the comment section whether you think QCOM would be able to provide an earnings beat and gave a strong outlook guidance with much AI commentary.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.