Qualcomm shares up sharpest in 2 years as forecast signals recovery in smartphone market

Qualcomm Inc, the world’s biggest seller of smartphone processors, witnessed a 10% spike in its shares after the company’s forecast for the June quarter signalled a recovery in the Android phone market.

The shares of Qualcomm closed at Rs 180.1 apiece on the NASDAQ on May 2, up 9.7% as against the previous day’s close. This was the sharpest single-day climb in the company’s stock in the last two years, with a previous intraday surge of more than 10% recorded in April 2022.

The spike in Qualcomm shares was driven by its post-earnings commentary, with the San Diego-based tech manufacturer projecting strong earnings in the quarter ending June 2024.

Qualcomm estimates total sales of $9.2 billion in the June quarter, beating analysts' estimate of $9.05 billion, as shared by LSEG. Similarly, the company sees adjusted profit at $2.25 per share, higher than the analysts’ projection of $2.17 a share.

Recovery in smartphone market

After a post-COVID-19 slump, the smartphone market could be headed for a recovery, as per the forecast shared by Qualcomm, experts said. The company is the biggest supplier of processors to smartphone makers like Apple and Samsung. However, it sees strong earnings from the Chinese market, where it supplies processors to local players like Xiaomi, Honor, OnePlus Technology, Oppo and Vivo.

China is emerging as a bright spot for the company, Qualcomm CEO Cristiano Amon was reported as saying by Bloomberg following the release of the company’s March quarter results.

Sale of processors to smartphone manufacturers in China has increased by 40% in the first half of the fiscal year (October 2023-September 2024), Amon said, adding that this is “reflecting our strong competitive positioning and recovery of demand”.

How Qualcomm performed in March quarter

The company’s net income in the March 2024 quarter increased by 36.5% year-on-year. It came in at $2.33 billion or $2.06 per share, as against $1.7 billion or $1.52 per share in the year-ago period.

The total revenue in the quarter stood at $9.39 billion, higher by 1.2% as compared to $9.27 billion in the year-ago period. It also surpassed the estimate of $9.34 billion, as per the LSEG data.

The adjusted profit during the January-March period came in at $2.44 per share, higher than the estimate of $2.32 a share.