Qualcomm (QCOM) Stock: Chipmaker Beats Earnings and Unveils AI Data Center Plans

TLDR

• Qualcomm reported fourth-quarter earnings of $3.00 per share and revenue of $11.27 billion, both beating analyst expectations of $2.88 and $10.79 billion.
• The company issued strong guidance for the first quarter, projecting revenue of $11.8 billion to $12.6 billion versus analyst estimates of $11.62 billion.
• Qualcomm announced plans to release new AI accelerator chips, the AI200 in 2026 and AI250 in 2027, competing with Nvidia and AMD in the data center market.
• BofA Securities raised its price target on Qualcomm from $200 to $215, citing handset strength in China and solid non-handset performance.
• The stock has risen 17% year-to-date but underperformed the Nasdaq’s 22% gain and trails far behind Nvidia’s 45% and AMD’s 112% increases.

Qualcomm delivered a solid fourth-quarter performance that exceeded Wall Street’s expectations. The chipmaker reported earnings of $3.00 per share on revenue of $11.27 billion.

Analysts had expected earnings of $2.88 per share and revenue of $10.79 billion. Revenue climbed 10% from $10.24 billion in the same quarter a year earlier.

The company did record a net loss of $3.12 billion, or $2.89 per share, for the quarter. This was due to an income tax expense, compared to net income of $2.92 billion a year earlier.

QUALCOMM Incorporated, QCOM

The guidance for the first quarter looked even better. Qualcomm expects revenue between $11.8 billion and $12.6 billion, with a midpoint of $12.2 billion.

That forecast beat the average analyst estimate of $11.62 billion. The company projected adjusted earnings per share of $3.30 to $3.50, compared to analyst expectations of $3.31.

The handset business remained the company’s largest segment. Revenue rose 14% to $6.96 billion in the quarter, driven by strength in the Chinese market.

Growth Beyond Smartphones

Qualcomm has been working to reduce its dependence on the mobile phone market. The company expects to lose Apple as a modem customer in the coming years.

The automotive division showed strong growth, with sales up 17% to $1.05 billion. The Internet of Things division, which includes revenue from Meta’s virtual reality headsets and smart glasses, generated $1.81 billion in sales.

That represented a 7% increase from the prior year. The licensing business saw revenue decline 7% to $1.41 billion, though it still beat expectations.

All three core segments topped analyst estimates. The results suggest Qualcomm’s diversification strategy is gaining traction, at least in the near term.

Taking on Nvidia in AI

The biggest news came last week when Qualcomm announced plans for new AI accelerator chips. The AI200 will launch in 2026, followed by the AI250 in 2027.

Both chips can be configured in full rack systems with liquid cooling. This puts Qualcomm in direct competition with Nvidia and AMD in the data center market.

Nvidia and AMD currently offer GPU systems that can connect up to 72 chips to function as a single computer. AI companies need this kind of computing power for training advanced models.

The announcement sent Qualcomm’s stock up 11% last week. However, the company still has ground to make up in the AI race.

BofA Securities raised its price target on Qualcomm from $200 to $215 while maintaining a Buy rating. The firm cited handset strength in China and solid performance in non-handset segments.

However, BofA also noted several risks. Chinese vendors represent about 68% of handset revenues, and there are signs that Xiaomi may develop its own chips.

Samsung’s share is expected to drop from 100% to 75% in the second quarter. Apple’s modem contract ends in roughly one year.

Qualcomm shares have gained 17% year-to-date. That trails the Nasdaq’s 22% gain and falls well short of competitors like Nvidia, which is up 45%, and AMD, which has surged 112%.

BofA expects Qualcomm’s valuation multiple to expand as its IoT, automotive, and data center businesses grow. The firm views the current handset concentration as the main near-term risk for investors.

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