After hours on the U.S. stock market, Qualcomm released its Q4 2024 earnings report, beating expectations and pushing the stock up by 6.3% post-close.
The report showed Q4 revenue of $10.24 billion, exceeding the forecast of $9.906 billion, and EPS of $2.59, above the expected $2.40. Looking ahead, Qualcomm projects next quarter's revenue between $10.5 and $11.3 billion, higher than analysts’ forecast of $10.54 billion, with EPS between $2.85 and $3.05, above the expected $2.81.
Despite strong results, Qualcomm’s stock has underperformed both the semiconductor sector and the broader market this half-year, pressured by rumors that ARM might cut off supply. However, growth potential in mobile chips, PC, and automotive markets offers Qualcomm valuation upside.
Business Analysis
In Q4, Qualcomm’s revenue reached $10.24 billion, up 18.7% year-over-year. Mobile chip revenue was $6.096 billion (up 11.7%), IoT revenue was $1.68 billion (up 21.7%), automotive chip revenue was $899 million (up 68%), and tech licensing brought in $1.52 billion (up 20.5%).
Mobile chip growth benefited from increased smartphone shipments and premium model sales. According to TechInsights, global smartphone shipments rose by 3.8% in Q3 2024, while Qualcomm's mobile chip revenue grew by 11.7%. Qualcomm expects limited growth in global smartphone shipments for FY 2025, but as AI features roll out in high-end models, it stands to gain as a key supplier for Android.
Qualcomm’s entry into the PC market with the Snapdragon X Elite series boosted IoT revenue by 21.7%, its fastest-growing segment. The number of platforms using Qualcomm PC chips grew from 20 in May to 58, with AI PC demand likely to further drive market share gains.
In automotive chips, Qualcomm saw exceptional performance, with revenue up 68%. Unlike competitors impacted by inventory issues, Qualcomm’s cockpit chips are primarily used in new models, with high demand and untapped potential. Chinese EV makers widely use Qualcomm’s cockpit chips, highlighting its growth prospects.
Future Outlook
Qualcomm’s patent dispute with ARM $ARM Holdings Ltd(ARM)$ remains a focal point, but executives are optimistic. With the Nuvia acquisition, Qualcomm is moving toward its own architectures to reduce ARM reliance. After ARM supply concerns initially hit Qualcomm’s stock, it has since outperformed ARM. The AI era presents ongoing growth opportunities for Qualcomm in the chip market, suggesting further valuation upside.
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