Qualcomm Earnings Beat Estimates. Why the Stock Is Still Falling

Qualcomm Incorporated (NASDAQ: QCOM) reported fiscal first quarter 2025 earnings on Wednesday, February 5, that topped analyst consensus top- and bottom-line estimates. Adjusted EPS soared to $3.41, exceeding the analyst estimate of $2.96. Revenue reached $11.67 billion, topping the predicted $10.91 billion. Despite the impressive earnings beat, Qualcomm's stock price fell by 3.5% in after-hours trading, raising concerns among investors.

Qualcomm's strong performance in the first quarter was driven by robust growth across key segments, particularly in the Qualcomm CDMA Technologies (QCT) segment. The QCT segment, which represents a significant portion of Qualcomm's revenue, saw revenue soar to $10.08 billion, driven by robust performances in handsets, automotive, and IoT sub-segments. In the handsets category alone, revenues rose 13% year over year to $7.57 billion, highlighting the continued success of its Snapdragon platform. Meanwhile, QCT's automotive revenue saw a remarkable 61% increase, reaching $961 million as a result of the growing adoption of its Snapdragon Digital Chassis.



However, the stock price decline can be attributed to several factors:

1. Market conditions: The broader market has been volatile recently, with concerns about the global economy and geopolitical tensions weighing on investor sentiment. This market uncertainty may have contributed to the stock price decline, despite Qualcomm's strong earnings.
2. Guidance concerns: While Qualcomm's earnings beat expectations, the company's guidance for the upcoming quarter may have fallen short of investor expectations. Qualcomm forecast sales in the range of $10.3 billion to $11.2 billion and adjusted EPS of $2.70 to $2.90 for the second quarter. Although these estimates are in line with analyst expectations, investors may have been hoping for more optimistic guidance.
3. Valuation concerns: Qualcomm's stock price has been on an upward trend in recent months, and the company's strong earnings may have been priced into the stock. As a result, investors may have been looking for more significant growth or a more optimistic outlook to justify the current valuation.



In conclusion, Qualcomm's earnings beat estimates in the first quarter of fiscal 2025, driven by strong growth in the QCT segment. However, the stock price fell in after-hours trading due to market conditions, guidance concerns, and valuation concerns. Investors should monitor the company's progress in its diversification efforts, particularly in the automotive and IoT sectors, as these areas are expected to play pivotal roles in future growth. Additionally, investors should keep an eye on the broader market conditions and Qualcomm's guidance to assess the company's long-term growth prospects.