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QCOM Stock Before Q4 Earnings Release: Smart Buy or Risky Move?
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Qualcomm Incorporated (QCOM - Free Report) is scheduled to report fourth-quarter fiscal 2025 earnings on Nov. 5. The Zacks Consensus Estimate for revenues and earnings is pegged at $10.75 billion and $2.87 per share, respectively, implying a rise from $10.24 billion and $2.69 recorded a year ago. Over the past 60 days, earnings estimates for QCOM for fiscal 2025 have remained steady at $11.89 per share, while the same for fiscal 2026 has increased marginally from $11.90 per share to $11.91.
QCOM Estimate Trend
Image Source: Zacks Investment Research
Earnings Surprise History
The chip manufacturer delivered a four-quarter earnings surprise of 6.2%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 2.6%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Qualcomm for the fiscal fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
With the accelerated rollout of 5G technology, Qualcomm is benefiting from investments toward building a licensing program in mobile. The company is well-positioned to meet its long-term revenue targets, driven by solid 5G traction, greater visibility and a diversified revenue stream. The company 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 launched two AI chips for Windows PCs that are likely to redefine the concept of multitasking across resource-intensive workloads. The newest entrants in the Snapdragon X Series are Snapdragon X2 Elite and Snapdragon X2 Elite Extreme – the latter being the advanced edition of the former. Leveraging the best-in-class 3rd Gen Qualcomm Oryon CPU, the Snapdragon X2 Elite enables powerful and efficient multitasking for improved productivity with up to 31% faster performance at ISO power and up to 43% lower power consumption than the previous generation. The Snapdragon X2 Elite Extreme uses a 192-bit memory interface for a higher bandwidth of 228 GB/s, while the Snapdragon X2 Elite uses a 128-bit memory interface in standard variants for a bandwidth of 152 GB/s.
In the fiscal fourth quarter, Qualcomm introduced a leading-edge automated driving system solution called Snapdragon Ride Pilot. The system was developed in collaboration with BMW. Powered by the Snapdragon Ride system-on-chip, the automotive driving software stack has set a new benchmark in ADAS (Advanced Driver Assistance System). The solution’s 360° Perception Layer leverages camera and radar systems to facilitate multiple operations such as object detection, surround view, lane recognition, traffic sign interpretation, parking assistance, driver monitoring and mapping. In addition, the all-electric Mercedes-Benz CLA and GLC versions will feature a sophisticated digital cockpit and connectivity by Qualcomm’s Snapdragon Digital Chassis solutions. These initiatives are likely to be reflected in the upcoming results.
Qualcomm collaborated with Harman to enable advanced AI models that transform the in-cabin experience, including real-time ADAS visualization, situational intelligence and empathetic user interfaces, which can interpret and respond to driver and passenger emotions, preferences and contextual cues. The company also launched the Dragonwing Q-6690, which is reportedly the world's first enterprise mobile processor with fully integrated RFID capabilities. It enables security-focused, contactless use cases such as access control, asset tracking, inventory management and product authentication, which are ideal for retail, logistics and industrial applications. As a result, the demand for Qualcomm's solutions is expected to rise, potentially driving higher revenues.
Price Performance
Over the past year, Qualcomm has gained 9.5% compared with the industry’s growth of 74.3%, lagging peers like Hewlett Packard Enterprise Company (HPE - Free Report) and Broadcom Inc. (AVGO - Free Report) . While Broadcom had gained 119.3%, Hewlett Packard was up 22% over this period.
Image Source: Zacks Investment Research
Key Valuation Metric
From a valuation standpoint, Qualcomm appears to be relatively cheaper compared to the industry and below its mean. Going by the price/earnings ratio, the company shares currently trade at 15.15 forward earnings, lower than 39.47 for the industry and the stock’s mean of 16.95.
Image Source: Zacks Investment Research
Investment Considerations
Qualcomm is one of the largest manufacturers of wireless chipsets based on baseband technology. The company is focusing on retaining its leadership in 5G, the chipset market and mobile connectivity with several technological achievements and innovative product launches. It is likely to help users experience a seamless transition to superfast 5G networks, delivering low-power, resilient multi-gigabit connectivity with unprecedented range and Qualcomm's best-in-class security. This, in turn, offers the flexibility and scalability needed for broad and fast 5G adoption through accelerated commercialization by OEMs.
In addition, solid growth opportunities within the mobile space led by innovations in the Snapdragon portfolio for premium-tier Android handsets and a firmer footing in the emerging market of driver-assistance technology with the Snapdragon Ride Advanced Driver Assistance Systems portfolio are tailwinds.
Despite efforts to ramp up its AI initiatives, Qualcomm has been facing tough competition from Intel in the AI PC market. Shift in the share among OEMs at the premium tier has reduced Qualcomm's near-term opportunity to sell integrated chipsets from the Snapdragon platform. The company is also facing stiff competition from Samsung’s Exynos processors in the premium smartphone market, while MediaTek is gaining market share in the mid-range and budget smartphone market. Qualcomm’s extensive operations in China are also likely to be significantly affected by the U.S.-China trade hostilities.
End Note
With solid fundamentals and healthy revenue-generating potential driven by robust demand trends, Qualcomm appears to be a solid investment proposition. It also looks cheaper relative to the industry. Further, a strong emphasis on quality, diligent execution of operational plans and continuous portfolio enhancements are driving more value for customers.
However, with a mixed bag of earnings estimates, the stock is witnessing neither too positive nor too negative investor sentiment. Moreover, stiff competition and softness in key end markets are likely to put pressure on the bottom-line growth. High R&D costs erode its profitability to a large extent. It is facing a tough operating environment in China amid escalating tariffs and anti-trust investigations, raising questions about its long-term viability plans in the communist country. Qualcomm seems to be treading in the middle of the road, and new investors could be better off if they trade with caution. A single quarter’s results are also not so important for long-term stakeholders and investors already owning the stock could stay put to reap long-term benefits.
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QCOM Stock Before Q4 Earnings Release: Smart Buy or Risky Move?
Qualcomm Incorporated (QCOM - Free Report) is scheduled to report fourth-quarter fiscal 2025 earnings on Nov. 5. The Zacks Consensus Estimate for revenues and earnings is pegged at $10.75 billion and $2.87 per share, respectively, implying a rise from $10.24 billion and $2.69 recorded a year ago. Over the past 60 days, earnings estimates for QCOM for fiscal 2025 have remained steady at $11.89 per share, while the same for fiscal 2026 has increased marginally from $11.90 per share to $11.91.
QCOM Estimate Trend
Image Source: Zacks Investment Research
Earnings Surprise History
The chip manufacturer delivered a four-quarter earnings surprise of 6.2%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 2.6%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Qualcomm for the fiscal fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Qualcomm currently has an ESP of +1.43% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping the Upcoming Results
With the accelerated rollout of 5G technology, Qualcomm is benefiting from investments toward building a licensing program in mobile. The company is well-positioned to meet its long-term revenue targets, driven by solid 5G traction, greater visibility and a diversified revenue stream. The company 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 launched two AI chips for Windows PCs that are likely to redefine the concept of multitasking across resource-intensive workloads. The newest entrants in the Snapdragon X Series are Snapdragon X2 Elite and Snapdragon X2 Elite Extreme – the latter being the advanced edition of the former. Leveraging the best-in-class 3rd Gen Qualcomm Oryon CPU, the Snapdragon X2 Elite enables powerful and efficient multitasking for improved productivity with up to 31% faster performance at ISO power and up to 43% lower power consumption than the previous generation. The Snapdragon X2 Elite Extreme uses a 192-bit memory interface for a higher bandwidth of 228 GB/s, while the Snapdragon X2 Elite uses a 128-bit memory interface in standard variants for a bandwidth of 152 GB/s.
In the fiscal fourth quarter, Qualcomm introduced a leading-edge automated driving system solution called Snapdragon Ride Pilot. The system was developed in collaboration with BMW. Powered by the Snapdragon Ride system-on-chip, the automotive driving software stack has set a new benchmark in ADAS (Advanced Driver Assistance System). The solution’s 360° Perception Layer leverages camera and radar systems to facilitate multiple operations such as object detection, surround view, lane recognition, traffic sign interpretation, parking assistance, driver monitoring and mapping. In addition, the all-electric Mercedes-Benz CLA and GLC versions will feature a sophisticated digital cockpit and connectivity by Qualcomm’s Snapdragon Digital Chassis solutions. These initiatives are likely to be reflected in the upcoming results.
Qualcomm collaborated with Harman to enable advanced AI models that transform the in-cabin experience, including real-time ADAS visualization, situational intelligence and empathetic user interfaces, which can interpret and respond to driver and passenger emotions, preferences and contextual cues. The company also launched the Dragonwing Q-6690, which is reportedly the world's first enterprise mobile processor with fully integrated RFID capabilities. It enables security-focused, contactless use cases such as access control, asset tracking, inventory management and product authentication, which are ideal for retail, logistics and industrial applications. As a result, the demand for Qualcomm's solutions is expected to rise, potentially driving higher revenues.
Price Performance
Over the past year, Qualcomm has gained 9.5% compared with the industry’s growth of 74.3%, lagging peers like Hewlett Packard Enterprise Company (HPE - Free Report) and Broadcom Inc. (AVGO - Free Report) . While Broadcom had gained 119.3%, Hewlett Packard was up 22% over this period.
Image Source: Zacks Investment Research
Key Valuation Metric
From a valuation standpoint, Qualcomm appears to be relatively cheaper compared to the industry and below its mean. Going by the price/earnings ratio, the company shares currently trade at 15.15 forward earnings, lower than 39.47 for the industry and the stock’s mean of 16.95.
Image Source: Zacks Investment Research
Investment Considerations
Qualcomm is one of the largest manufacturers of wireless chipsets based on baseband technology. The company is focusing on retaining its leadership in 5G, the chipset market and mobile connectivity with several technological achievements and innovative product launches. It is likely to help users experience a seamless transition to superfast 5G networks, delivering low-power, resilient multi-gigabit connectivity with unprecedented range and Qualcomm's best-in-class security. This, in turn, offers the flexibility and scalability needed for broad and fast 5G adoption through accelerated commercialization by OEMs.
In addition, solid growth opportunities within the mobile space led by innovations in the Snapdragon portfolio for premium-tier Android handsets and a firmer footing in the emerging market of driver-assistance technology with the Snapdragon Ride Advanced Driver Assistance Systems portfolio are tailwinds.
Despite efforts to ramp up its AI initiatives, Qualcomm has been facing tough competition from Intel in the AI PC market. Shift in the share among OEMs at the premium tier has reduced Qualcomm's near-term opportunity to sell integrated chipsets from the Snapdragon platform. The company is also facing stiff competition from Samsung’s Exynos processors in the premium smartphone market, while MediaTek is gaining market share in the mid-range and budget smartphone market. Qualcomm’s extensive operations in China are also likely to be significantly affected by the U.S.-China trade hostilities.
End Note
With solid fundamentals and healthy revenue-generating potential driven by robust demand trends, Qualcomm appears to be a solid investment proposition. It also looks cheaper relative to the industry. Further, a strong emphasis on quality, diligent execution of operational plans and continuous portfolio enhancements are driving more value for customers.
However, with a mixed bag of earnings estimates, the stock is witnessing neither too positive nor too negative investor sentiment. Moreover, stiff competition and softness in key end markets are likely to put pressure on the bottom-line growth. High R&D costs erode its profitability to a large extent. It is facing a tough operating environment in China amid escalating tariffs and anti-trust investigations, raising questions about its long-term viability plans in the communist country. Qualcomm seems to be treading in the middle of the road, and new investors could be better off if they trade with caution. A single quarter’s results are also not so important for long-term stakeholders and investors already owning the stock could stay put to reap long-term benefits.