Qualcomm (QCOM) Stock: Earnings Beat Fuels AI Chip Ambitions

TLDR

• Qualcomm posted Q4 earnings of $3.00 per share, beating estimates of $2.88, with revenue of $11.27 billion surpassing projections of $10.79 billion.
• Q1 guidance projects revenue of $11.8 billion to $12.6 billion, exceeding analyst estimates of $11.62 billion.
• The company unveiled AI200 and AI250 data center chips launching in 2026 and 2027 to challenge Nvidia and AMD.
• Handset revenue grew 14% to $6.96 billion while automotive sales jumped 17% to $1.05 billion.
• BofA Securities lifted its price target from $200 to $215 but warned of risks from Apple contract ending and Chinese market exposure.

Qualcomm crushed fourth-quarter expectations with earnings and revenue that topped Wall Street forecasts. The chipmaker posted $3.00 per share compared to analyst estimates of $2.88.

Revenue came in at $11.27 billion, beating the $10.79 billion projection. Year-over-year revenue grew 10% from $10.24 billion in the prior-year quarter.

QUALCOMM Incorporated, QCOM

The company recorded a net loss of $3.12 billion due to a tax expense. Despite this accounting hit, the operational performance told a different story.

Strong Guidance Points to Momentum

Qualcomm’s first-quarter outlook impressed investors even more than the Q4 results. The company projects revenue between $11.8 billion and $12.6 billion.

The midpoint of $12.2 billion easily tops the $11.62 billion analyst consensus. Adjusted earnings per share should land between $3.30 and $3.50, matching Wall Street’s $3.31 estimate.

The handset business delivered $6.96 billion in revenue, up 14% year-over-year. Chinese market strength and holiday timing drove the growth.

Automotive revenue climbed 17% to $1.05 billion. The Internet of Things segment, which includes Meta headset sales, grew 7% to $1.81 billion.

Only the licensing business declined, falling 7% to $1.41 billion. Still, all segments beat analyst projections according to StreetAccount data.

AI Chips Target Nvidia Territory

Qualcomm announced plans for two new AI accelerator chips last week. The AI200 arrives in 2026, with the AI250 following in 2027.

Both chips support full rack configurations with liquid cooling. This matches the setup Nvidia and AMD use for their data center systems.

These systems can link up to 72 chips to work as one massive computer. AI labs require this power to train cutting-edge models.

The AI chip news pushed Qualcomm shares up 11% immediately. The company is making a play for the lucrative data center market.

Analyst Outlook Mixed with Risks

BofA Securities bumped its price target to $215 from $200 while keeping a Buy rating. The firm praised handset performance and diversification progress.

However, BofA flagged several concerns. Chinese vendors account for roughly 68% of handset revenues, creating geographic concentration risk.

Xiaomi shows signs of developing in-house chips. Samsung’s share will drop from 100% to 75% next quarter.

Apple’s modem contract expires in about one year. The smartphone chip market itself isn’t growing much overall.

Qualcomm stock is up 17% this year. That trails the Nasdaq’s 22% gain, Nvidia’s 45% surge, and AMD’s 112% rally.

BofA expects the valuation multiple to expand as IoT, automotive, and data center revenue grows. For now, heavy handset reliance remains the biggest risk factor.

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