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Qualcomm has announced fiscal third-quarter earnings that exceeded Wall Street estimates, on the back of robust performance across several business lines as well as the expanding smart devices business that is powered by AI. The company reported adjusted earnings per share of $2.77 on revenue of $10.37 billion, exceeding analysts expectations of $2.71 of earnings per share and $10.35 billion of revenue. Nevertheless, the shares of Qualcomm dropped a bit after the beat.
The chipmaker provided a better-than-anticipated outlook on the current quarter, looking forward. At the midpoint of its guidance, Qualcomm forecasts adjusted earnings of $2.85 per share and revenue of $10.7 billion, both above the current analysts consensus of $2.83 EPS and $10.35 billion. The net income increased to $2.66 billion, or $2.43 per share, versus $2.13 billion, or $1.88 per share, in the same quarter in the previous year.
The chip business that makes the high-end smartphones, such as those made by Samsung and Apple, is the main handset chip division of Qualcomm, and it posted revenue of $6.33 billion, slightly lower than the expected revenue of $6.44 billion. Although Apple is a big customer, the company expects to lose the business within the next few years, and the company is changing gears in order to diversify its services.
One of the highlights was that the Qualcomm Internet of Things (IoT) business reported revenue of $1.68 billion, which was high due to robust demand from Meta to purchase chips they use in their Ray-Ban smart glasses and Quest headsets. CEO Cristiano Amon stressed that these devices represent the strategy of Qualcomm, whose goal is to make possible personal AI, which implies that AI applications are run on devices and not on the cloud.
Meta CFO Akash Palkhiwala added that the company is consuming more chips than the company had anticipated, and Amon said the company will start reporting growth information without Apple, which is currently growing at about 15% this year. Qualcomm is also targeting the AI in data centres market; it is in late-stage discussions with a large cloud provider, which could provide a revenue opportunity as early as in fiscal year 2028.
The automotive segment of Qualcomm rose 21 percent year over year to $984 million, and its licensing business (QTL), which encompasses patents on 5G and other technologies, contributed to the amount of $1.32 billion that was 11 percent higher. The firm has paid out close to a billion dollars in dividends and has bought back $2.8 billion of its stock in the quarter.
