Qualcomm’s Stock Poised for a Key Test as Earnings Approach

As Qualcomm Inc. prepares to announce its earnings on Wednesday afternoon, the focus among analysts and investors will be on the potential impacts of tariffs under the Trump administration and the ongoing relationship with Apple Inc. These factors play a significant role in the company’s outlook, especially considering the nuances of the semiconductor industry this year.

Analyst Insights and Expectations

Recent commentary from Cantor analysts suggests that Qualcomm (QCOM) is expected to report an earnings beat for the second quarter, citing adjustments in guidance that align with expectations. However, they caution about the impending risk of losing Apple’s business as the tech giant may phase out Qualcomm’s modem in the latter half of the year. This potential transition is particularly crucial; analysts will be keeping a close eye on Qualcomm’s commentary regarding its partnership with Apple and how it plans to adapt to these changes.

The shift in business dynamics has led Cantor analysts to suggest that current consensus estimates for Qualcomm’s revenues in 2025 and 2026 could be optimistic. They anticipate a downward adjustment given the likelihood of a significant reduction in sales derived from Apple—a crucial partner for Qualcomm. Current consensus estimates indicate a 7% growth rate for 2025 and 3% for 2026, but analysts contend these figures may need to be revised.

Financial Performance Expectations

For the March quarter, Qualcomm is projected to deliver adjusted earnings of $2.82 per share and report revenues of approximately $10.6 billion, according to analysts’ estimates gathered by FactSet. As the company moves into the June quarter, expectations are tempered, with a consensus revenue forecast of around $10.3 billion and adjusted earnings per share of $2.67.

Cantor analysts also highlight a possible bright spot in automotive technology, anticipating a sizable revenue boost from this segment—a potential milestone as revenues may surpass $1 billion for this area alone. New vehicle launches are geared to drive this sector’s growth, reinforcing Qualcomm’s diversification strategy.

The Internet of Things and Future Outlook

The evolution of Qualcomm’s Internet of Things (IoT) business is another critical area of focus. Analysts are honing in on growth in sectors such as PCs, XR/AR glasses, and industrial applications—these are vital markets where Qualcomm’s portfolio is expected to thrive. However, analysts caution that while diversification is essential, it will take time for these initiatives to bear fruit fully.

Bernstein analysts echo similar sentiments, predicting revenues of $10.6 billion for Qualcomm in the March quarter, slightly lower earnings at $2.80 per share, and additional revenue of $10.4 billion projected for June with earnings dropping to $2.62. With the uncertainty surrounding tariffs, Bernstein analysts express concerns about the company’s visibility moving forward, reflecting that Qualcomm is known to be conservative with financial forecasting. Any weaker guidance may not astonish investors who have become accustomed to a cautious approach from Qualcomm.

Qualcomm’s Performance Amid Challenges

Despite facing “heavy smartphone exposure” to potential tariffs, Qualcomm’s stock performance has been noteworthy this year. It has outperformed the broader market, particularly when compared to the S&P 500 and the PHLX Semiconductor Index. So far this year, Qualcomm shares have only seen a 4% decline compared to the S&P 500’s 5% loss and the PHLX Semiconductor Index’s 15% drop, indicating resilience despite headwinds.

Interestingly, while U.S. smartphone shipments—impacting approximately 10% of Qualcomm’s total sales—are notably dominated by Apple’s iPhones, the company’s fabless model may provide some defense against retaliatory tariffs from China, should they become a reality.

Conclusion

As Qualcomm prepares to unveil its earnings, the focus will not only be on the numbers but also on the broader implications of its current business landscape—particularly in relation to Apple and the Chinese tariffs. Investors are keenly awaiting any actionable insights that may shape Qualcomm’s trajectory in the semiconductor industry moving forward.