By Stephen Nellis and Arsheeya Bajwa
(Reuters) -Qualcomm on Wednesday forecast sales and profits above analyst expectations as artificial intelligence features helped fuel demand for smartphones, laptops and other devices powered by its chips.
For its current fiscal second quarter, Qualcomm forecast a sales range with a midpoint of $10.75 billion and adjusted profits of $2.80 per share, both above analyst estimates of sales of $10.34 billion and adjusted profit $2.69 per share, according to data from LSEG.
After the results, Qualcomm shares sank in choppy trade and were last down 3%. Investors have been looking for increasing payoffs from AI, and the chipmaker’s stock price has rallied 14% so far in 2025, outperforming a gain of about 3% in the S&P 500.
Qualcomm also disclosed that its licensing agreement with Huawei has expired, though the two firms are in “discussions.” While the U.S. government terminated Qualcomm’s license to continue selling chips to Huawei last year, the company had continued to receive license payments on the small number of phones Huawei makes with its own chips.
Qualcomm, the world’s biggest supplier of modem chips that connect smartphones to wireless data networks, said last month it had won a major new deal with Samsung Electronics to provide chips for the South Korean firm’s flagship mobile phones around the world. San Diego, California-based Qualcomm is also working with Microsoft and computer manufacturers to offer a range of laptops and PCs based on its chips.
“Expectations were somewhat high going into the print but we think it is justified as Qualcomm has a decent storyline for total addressable market expansion in the PC client market and share gain in the smartphone market with its strong position in the premium tier segment,” said Kinngai Chan, an analyst with Summit Insights.
Qualcomm reported sales of $11.67 billion and adjusted profits of $3.41 per share for its fiscal first quarter ended December 29. Both were well above analyst estimates of $10.93 billion for sales and adjusted profits of $2.96 per share, according to data from LSEG.
At the midpoints of the ranges, Qualcomm forecast second-quarter revenues of $9.2 billion for its chip business and $1.35 billion for patent licensing. Wall Street had expected $8.90 billion for chips and $1.43 billion for patent licensing, according to LSEG data.
While Qualcomm has diversified its offerings into PCs, cars and other markets, the smartphone market remains its stronghold, supplying both Apple and Chinese handset makers such as Xiaomi, Oppo and Vivo. The Chinese smartphone market has struggled with weak demand, with the Chinese government stepping in to provide subsidies for low- and mid-tier handset sales in the country.