Artificial intelligence and automotive revenue, as well as growth initiatives, are among the items investors and analysts will be watching when semiconductor company Qualcomm Inc QCOM reports third-quarter financial results on Wednesday, July 31 after market close.
Earnings Estimates: Analysts expect Qualcomm to report third-quarter revenue of $9.22 billion, according to data from Benzinga Pro.
The company reported revenue of $8.44 billion in last year's third quarter. Qualcomm has beaten analysts' revenue estimates in three straight quarters and eight of the past 10 quarters.
Analysts expect Qualcomm to report third-quarter earnings per share of $2.25, compared to $1.87 reported in last year's third quarter.
The company has beaten analysts' estimates for earnings per share in four straight quarters and eight of the last 10 quarters. Two of the past 10 quarters saw earnings estimates from analysts met, meaning Qualcomm hasn't missed EPS estimates from analysts in any of the past 10 quarters.
Qualcomm is guiding for third-quarter revenue to come in a range of $8.8 billion to $9.6 billion. Guidance for third-quarter earnings per share is a range of $2.15 to $2.35.
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What Analysts Are Saying: With Qualcomm shares down 14% over the last month, some analysts point to the semiconductor stock having a good entry point ahead of artificial intelligence product launches.
JPMorgan analyst Samik Chatterjee recently highlighted this opportunity in an investor note.
"Share price pull-back offers entry point," Chatterjee said.
The analyst, who has an Overweight rating and $235 price target for the shares, highlighted the upcoming AI launches for the company and their benefit on financial growth.
"We see double-digit revenue growth consistently in the medium-term."
Chatterjee said Qualcomm's AI smartphone ramp-up could ensure "double-digit content increases."
"We expect FY25 to mark Qualcomm's return to double-digit revenue growth with strong gains in both Handsets and Automotive sectors."
The analyst said Qualcomm's PC-related revenue could grow from $300 million in 2024 to $3.7 billion in 2027 thanks to a focus on the AI PC market.
Here are other analyst ratings on Qualcomm and their price targets:
Baird: Maintained Outperform rating, raised price target from $200 to $250
Susquehanna: Maintained Positive rating, raised price target from $205 to $250
HSBC: Downgraded from Buy to Hold, maintained $200 price target
Cantor Fitzgerald: Maintained Neutral rating, raised price target from $190 to $215
Citigroup: Maintained Neutral rating, raised price target from $170 to $200
KeyBanc: Maintained Overweight rating and raised price target from $205 to $225
Key Items to Watch: Artificial intelligence will likely take center stage for Qualcomm in its earnings report, prepared remarks and conference call. AI is a key growth initiative for the company across several business sectors.
"Upcoming launches with our Snapdragon X platforms, and enabling leading on-device AI capabilities across multiple product categories," the company said when discussing growth in its second-quarter financial results.
The first wave of flagship Android smartphones with AI launched prior to the second-quarter results being reported and could factor heavily into third-quarter results and future guidance.
Qualcomm's automotive revenue could also be a key to watch in the quarterly results. Automotive segment revenue was $603 million in the second quarter, up 35% year-over-year. The figure set a quarterly record for the company.
The company said its pipeline for new automotive design wins stands at around $45 billion.
Qualcomm announced the new Snapdragon 4s Gen 2 entry-level chip recently. The chip could bring 5G to more countries and to sub-$100 devices, TechCrunch reported.
The third-quarter results from Qualcomm could highlight the recent and upcoming product launches and their market opportunity size. With three quarters complete, investors and analysts will be eyeing full-year guidance and any update on what to expect in the next fiscal year.
QCOM Price Action: Qualcomm shares trade at $167.99 Tuesday at publication versus a 52-week trading range of $104.33 to $230.63. Qualcomm stock is up 17% year-to-date in 2024, with a recent 14% drop in the past month.
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