Why Qualcomm Shares Surged Over 12% After-Hours Wednesday

Qualcomm Inc QCOM shares spiked 12% during the after-hours session Wednesday. The surge came as the chipmaker said it foresees the demand for 5G smartphones to double the shipments next year, with a forecasted range between 450 million to 550 million smartphones.

What Happened: Aside from smartphones, the company also expects to gain from the Internet of Things and networking gears segments, according to the Wall Street Journal.

On Wednesday, Qualcomm released its financials for the fourth quarter and the fiscal year ended Sept. 27. 

GAAP revenues of $23.53 billion for fiscal 2020 fell by 3% year-over-year, whereas GAAP diluted earnings per share of $4.52 were 26% higher compared to Q4 2019. This includes a $1.8 billion or $1.37 per share impact from a settlement agreement as well as certain royalties under the new global patent licensing agreement with Huawei.

Qualcomm CEO Steve Mollenkopf said the company is "well positioned for growth in 2021 and beyond.”

Why Does It Matter: Apple’s 5G device launches could further boost Qualcomm’s sales in the upcoming quarters, the Journal reported based on analyst consensus.

The semiconductor industry is witnessing a wave of consolidation with merger agreements. Last week, reports disclosed that Marvell Technology Group Ltd MRVL and Inphi Corporation IPHI are in talks for a $10 billion deal. In mid-September, Nvidia Inc NVDA bought British semiconductor company Arm Holdings for a $40 billion consideration.

Price Action: After a 2.81% increase during trading hours, QCOM stock further surged 12.89% in the after-hours at $145.60 per share.

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