Qualcomm (QCOM) 5G Chip Traction and Edge Computing Demand Key To Earnings Surprise

Qualcomm is expected to show a rise in its quarterly revenue with 14.3% increase in revenue to $9.905 billion from $8.67 billion a year ago.

This sits well with Qualcomm’s guidance on 31 July 2024, for the period ended 30 September, was for revenue between $9.50 billion and $10.30 billion. (Revenue Majority Basis is Non-GAAP)

Mean analyst estimate for Qualcomm Inc is for earnings of $2.55 per share. This is within the company's EPS guidance on 31 July 2024, for the period ended 30 September, was between $2.45 and $2.65

The chip manufacturer delivered a four-quarter earnings surprise of 7.6%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 3.6%.

And we are seeing consistent EPS surprise recent two quarter, we could be seeing a strong surprise beat as the long term 5G traction and edge computing demand especially for AI inference would be beneficial for Qualcomm.

As AI development have moved quickly and strongly into inference, the need for 5G enabled portable devices have been growing, we can seeing that Qualcomm is benefiting from investments toward building a licensing program in mobile with the accelerated rollout of 5G technology,

Qualcomm is well-positioned to meet its long-term revenue targets driven by solid 5G traction, greater visibility and a diversified revenue stream. Qualcomm intends to harness artificial intelligence (AI) to meet increased demands for essential products and services that are the building blocks of digital transformation in a cloud economy.

Qualcomm envisions solid growth opportunities within the mobile space, driven by the strength of its Snapdragon portfolio.

During the fiscal fourth quarter, Qualcomm announced that Samsung deployed its advanced Snapdragon 8 Gen 3 Mobile Platform across the new Galaxy Z series smartphones, Galaxy Z Fold6 and Galaxy Z Flip6 models. The Snapdragon 8s Gen 3 mobile platform boasts an immersive Snapdragon Elite Gaming feature and AI-enhanced photos to help users capture and edit photos with improved quality and creativity.

It highlights Qualcomm's growing prowess in the AI chip market, demonstrating its commitment to bringing top-tier AI experiences to end users.

These latest additions to the Snapdragon Digital Chassis Solution portfolio are gaining significant market traction. Major car manufacturers such as Mercedes-Benz AG and Li Auto have already opted to deploy these solutions in their next-generation vehicles.

QUALCOMM is witnessing healthy traction in EDGE networking that helps to transform connectivity in cars, business enterprises, homes, smart factories, next-generation PCs, wearables and tablets.

The automotive telematics and connectivity platforms, digital cockpit and C-V2X solutions are also fueling emerging automotive industry trends such as the growth of connected vehicles, the transformation of the in-car experience and vehicle electrification.

QCOM is witnessing increasing demand for high-end chipsets such as AI-optimized Snapdragon 8 Gen 3 chips. These chips include features like enhancing voice assistants and image generation.

In the fiscal fourth quarter, Qualcomm collaborated with Aramco to deploy generative AI-powered Internet of Things (IoT) solutions to accelerate digital transformation initiatives in Saudi Arabia.

The solution suite includes a Rapid Response Solution that bolsters situational awareness and minimizes operational disruptions with the help of on-device AI and computer vision. The system features autonomous AI drones with generative AI flight control that respond quickly and effectively to onsite incidents.

The Factory Monitoring Solution delivers real-time insights and predictive analytics to enhance operational efficiency and safety with advanced video surveillance. Utilizing multimodal inputs and hybrid AI in conjunction with on-device AI and edge cloud AI processing, the Equipment Maintenance Solution streamlines maintenance practices.

Moreover, its AI native worker assist technology effectively predicts and prevents equipment failures, optimizing performance, lowering maintenance costs and reducing downtime. These initiatives are likely to be reflected in the upcoming results.

If we looked at how Qualcomm stock price have moved before and after its quarterly result, the recent two quarter have Qualcomm gaining more than 8%.

This could signal that a positive earnings result preferably a surprise and also positive outlook and guidance should bring us the same increase from Qualcomm on its stock price.

Though we are seeing pretty much positive factors that could help QCOM to post a positive earnings and also a good guidance for 2024, but its current stock price is trading in a downward trend,

This is caused by weakness in the semiconductor space as QCOM have been trading below short-term and long-term MA since end of last week, and we are not seeing any signs of recovery on Monday (04 Nov).

MACD is also showing downside movement after period of indecisive movement, we need to see how QCOM could be trading in today (05 Nov) session, we need some catalyst or investors sentiment to improve as we looked forward to the US election results.

I will be watching closely on the price action for this stock because the current price for QCOM looked like a potential buy if we could get the same 8% surge after earnings.

I think QCOM stock price might be dragged by the weakness from semiconductor space, but if there is any catalyst like the US election result and FOMC meeting, that could change.

Together with the factors like 5G chip traction strong and edge computing demand growing, these could help to create a surge in stock price for QCOM after its earnings.

Appreciate if you could share your thoughts in the comment section whether you think QCOM could create a surprise to bring the semiconductors stocks together in an upside movement?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.