Earnings season is still underway, with plenty of companies left to report their results. So far, it’s been a well-enough season, but perhaps not as fantastic as last quarter’s. Qualcomm (NASDAQ: QCOM) was one of many companies that reported its Q4 results on Wednesday. Strong demand for computer chips helped push the company’s earnings above expectations once again.
Total revenue came in at $10.7 billion, slightly higher than the $10.4 billion originally expected. That’s also a 30% increase compared to over a year ago. All of this is impressive enough by itself. However, earnings per share (EPS) were up as well. Q4 EPS was at $3.23, compared to the $3.01 expected by Wall Street. Once again, that’s a 49% year-over-year increase.
“Our record quarterly results reflect the strong demand for our products and technologies, with QCT revenues exceeding those of any fabless semiconductor company,” said Cristiano Amon, President and CEO of Qualcomm. “We are at the beginning of one of the largest opportunities in our history, with our addressable market expanding by more than seven times to approximately $700 billion in the next decade.”
Amon, who became Qualcomm’s CEO last year, also made it a policy to diversify the markets in which the company sells its chips. This includes cars, especially as the surging demand for electric vehicles will require an equal increase in chip parts.
The global semiconductor shortage isn’t expected to improve anytime soon. Most experts think we’ll still have supply issues going into 2023 as well. While that’s leading to higher prices for electronics, it’s great news for businesses in the chip industry itself. Other companies like Nvidia, Intel, and AMD have all done incredibly well for themselves amidst this broader chip shortage.
Shares of Qualcomm were up more than 6.3% on Wednesday following the news. However, shares are starting to give back some of those gains as of Thursday pre-market trading, with the stock dipping by 3.7%. Overall, most analysts remain incredibly optimistic about Qualcomm’s future, especially as the overall demand for chips isn’t expected to slow down anytime soon.
Looking at the big picture, most companies have managed to report better-than-expected Q4 results so far this earnings season. However, the degree to which they’ve surpassed estimates isn’t as overwhelming as it was back in Q3, for example. Once multiple interest rate hikes from the Fed kick in, many of these growth and tech companies are expected to do significantly worse going forward into 2021. That might include Qualcomm and other chip manufacturers.
Qualcomm Company Profile
Qualcomm develops and licenses wireless technology and designs chips for smartphones. The company’s key patents revolve around CDMA and OFDMA technologies, which are standards in wireless communications that are the backbone of all 3G and 4G networks. The firm is a leader in 5G network technology as well. Qualcomm’s IP is licensed by virtually all wireless device makers. The firm is also the world’s largest wireless chip vendor, supplying nearly every premier handset maker with leading-edge processors. Qualcomm also sells RF-front end modules into smartphones and chips into automotive and Internet of Things markets. – Warrior Trading News
