Qualcomm’s stock rose 15% in after-hours trading, even though the company predicted lower-than-expected third-quarter results. This jump came after CEO Cristiano Amon made optimistic comments about a rebound in its main smartphone business and new opportunities in data centers.
Amon expressed confidence that the smartphone market will start to recover after its fiscal third quarter. “We can now call the bottom,” Amon said. He added that the company’s licensing business, which beat expectations, gives them good insight into smartphone makers’ plans for later in the year.
Qualcomm has faced a lot of uncertainty from smartphone makers this year. A surge in memory chip prices has also made smartphones and PCs more expensive, causing customers to buy less. On Wednesday, the company said it expects revenue between $9.2 billion and $10 billion for the current quarter. This range is entirely below the $10.27 billion estimates compiled by LSEG data.
Qualcomm, one of the world’s largest smartphone chip firms, supplies major players like Apple and Samsung, as well as Chinese phone brands. The company’s strong ties to consumer electronics — providing chips for wireless headphones, smartphones, and car systems — make its results a good indicator of the market’s health and consumer demand.
Qualcomm also predicted third-quarter adjusted profit of $2.10 to $2.30 per share, compared to estimates of $2.45. Qualcomm is working hard to enter the fast-growing data center chip market. The company plans to start shipping products for this segment before the end of the year.
Amon said on Wednesday that Qualcomm is working with customers on three types of chips: central processing units (CPUs), accelerators for AI “inference” tasks, and custom chips called ASICs. This ASIC market is booming for rivals like Broadcom and Marvell.
“We are involved in custom ASICs, which was our goal when we bought AlphaWave,” Amon said. “Now we have a lot of connectivity (intellectual property) that lets us do that. We’re working on all three” chip categories. Qualcomm bought AlphaWave, which designs semiconductor technology parts, last year in a $2.4 billion deal.
Cloud providers have been buying many CPUs as they move from training AI models to actually using them. This process, known as inference, requires chips to handle heavy workloads. “They are starting small, but they are already increasing the range of options they are bringing to data centers, which shows their strategy and offerings are maturing,” said Bob O’Donnell, president and chief analyst at TECHnalysis Research.
The shift to the data center business comes as Samsung and Apple are increasingly choosing to use their own in-house chips. “Regarding Apple product revenue for fiscal ’27, we’ve seen analyst models in the range of a little over $2 billion in terms of QCT product revenue for the year. And we think that’s a reasonable place to model the business,” CFO Akash Palkhiwala said on a call after the earnings report, referring to the company’s chip segment. Qualcomm predicted third-quarter chip revenue between $7.9 billion and $8.5 billion, below estimates of $8.93 billion.
