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Qualcomm Stock Before Q2 Earnings: A Sensible Buy or Risky Move?
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Key Takeaways
QCOM reports earnings on April 29 with $10.62B expected in revenues and $2.57 EPS estimates.
Qualcomm faces DRAM shortages, rising costs, and smartphone demand risks pressuring near-term growth.
Qualcomm expands into robotics and auto via NEURA, Hyundai, and Garmin partnerships to boost revenue.
Qualcomm Incorporated (QCOM - Free Report) is scheduled to report second-quarter fiscal 2026 earnings on April 29. The Zacks Consensus Estimate for revenues and earnings is pegged at $10.62 billion and $2.57 per share, respectively. Over the past 60 days, earnings estimates for QCOM for fiscal 2026 have declined 2.74% to $10.99 per share, while the same for fiscal 2027 has decreased from $11.69 per share to $11.08.
QCOM Estimate Trend
Image Source: Zacks Investment Research
Earnings Surprise History
The chip manufacturer delivered a four-quarter earnings surprise of 2.68%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 3.24%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Qualcomm for the fiscal second 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 not 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 -0.43% with a Zacks Rank #5 (Strong Sell).
During the fiscal second quarter, Qualcomm introduced a next-generation robotics comprehensive-stack architecture that integrates hardware, software, and compound AI. It also unveiled its latest high-performance robotics processor for industrial AMRs and advanced full-size humanoids, dubbed the Qualcomm Dragonwing IQ10 Series, for transforming prototypes into deployable, intelligent machines. It has entered into a strategic collaboration with NEURA Robotics. NEURA is driving leading-edge innovation in the field of robotics. The company aims to bring a general-purpose humanoid robot to market with human-like cognitive capabilities. In this venture, NEURA will gain access to Qualcomm’s robotics processors, including the Dragonwing IQ10 Series, physical AI acceleration and software stack, and connectivity platforms.
In the quarter under review, Qualcomm inked a comprehensive agreement with Hyundai to co-develop next-generation solutions for Software-Defined Vehicle (SDV) and Advanced Driver Assistance Systems (ADAS). It had also extended its collaboration with Garmin with the addition of the Nexus automotive-grade High Performance Compute (HPC) platform. Powered by Qualcomm’s Snapdragon Elite Platform for automotive, Nexus will integrate multiple vehicle domains, such as in-vehicle infotainment, instrument clusters and ADAS, into a single system for optimal efficiency. Strategic collaboration with industry leaders and innovative product launches are likely to have a positive impact in the second quarter results.
However, Qualcomm’s growth prospects are affected by memory supply shortages. Memory suppliers are redirecting capacity. Companies like Samsung and Micron are allocating more production to high-bandwidth memory to support the expanding AI data center market. This means less supply for mobile DRAM (Dynamic Random Access Memory). Amid such supply uncertainty, smartphone makers are witnessing higher costs due to the price hike of DRAMs. Premium smartphones are still a major revenue earner for Qualcomm. If OEMs slow down smartphone production owing to this situation, this may significantly affect Qualcomm’s top-line growth in the near term.
Moreover, growing geopolitical unrest worldwide can also impact its operations. Fluctuations in energy prices and supply chain issues stemming from the war in the Middle East could drive up logistics expenses and the price of critical components. This could impact margins.
Price Performance
Over the past year, Qualcomm has gained 0.8% compared with the industry’s growth of 121.9%, lagging competitors like Intel Corporation (INTC - Free Report) and Broadcom Inc. (AVGO - Free Report) . While Broadcom had gained 119.6%, Intel surged 302.4% 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’s shares currently trade at 13.48 forward earnings, lower than 33.54 for the industry and the stock’s mean of 16.51.
Image Source: Zacks Investment Research
Investment Considerations
Qualcomm is affected by aggressive competition in the mobile chipset market. Despite its effort to expand into other high-growth markets such as Robotics and automotive, the company still relies significantly on premium-tier handset demand for both chip sales and licensing revenues. Moreover, revenue concentration is tied to a few large OEMs such as Samsung and some Chinese smartphone manufacturers. The slowdown in the premium smartphone demand due to macro headwinds will directly hit its profits. Shortage of mobile DRAM remains a major concern in the near term.
Owing to growing geopolitical volatility, inflation and supply chain issues, several OEMs are moving toward designing chips in-house. This transition towards vertical integration by customers can significantly impact its top-line growth. Qualcomm has been facing challenges from low-cost chip manufacturers like MediaTek and Rockchip, as well as handset manufacturers' SoC projects such as Exynos by Samsung. To reduce its dependence on the smartphone market, the company has been expanding into the AI PC domain. However, Intel and AMD remain major players in that space, which is hindering Qualcomm’s growth initiatives. Broadcom remains a major competitor in the connectivity and radio frequency chip domain.
The company also has extensive operations in China. OEMs based in the communist nation are largely pulling back on new 4G device orders and managing their inventory in advance for the transition to 5G. Consequently, Qualcomm expects a significant impact on device shipments as sell-in and sell-through growth rates realign and channel inventory levels are drawn down in China.
End Note
Qualcomm is affected by fierce competition across several verticals. DRAM price hike, memory shortage, and supply chain issues will likely strain margins in the near term. Its customers’ push toward vertical integration remains a headwind. High dependence on the Chinese market is a concern. As U.S.- China related tensions grow, the market share of domestic Chinese chipmakers is growing. Declining earnings estimates show dwindling investors’ confidence in the stock’s growth potential. Owing to these factors, it might be prudent to avoid the stock at the moment.
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Qualcomm Stock Before Q2 Earnings: A Sensible Buy or Risky Move?
Key Takeaways
Qualcomm Incorporated (QCOM - Free Report) is scheduled to report second-quarter fiscal 2026 earnings on April 29. The Zacks Consensus Estimate for revenues and earnings is pegged at $10.62 billion and $2.57 per share, respectively. Over the past 60 days, earnings estimates for QCOM for fiscal 2026 have declined 2.74% to $10.99 per share, while the same for fiscal 2027 has decreased from $11.69 per share to $11.08.
QCOM Estimate Trend
Image Source: Zacks Investment Research
Earnings Surprise History
The chip manufacturer delivered a four-quarter earnings surprise of 2.68%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 3.24%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Qualcomm for the fiscal second 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 not 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 -0.43% with a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping the Upcoming Results
During the fiscal second quarter, Qualcomm introduced a next-generation robotics comprehensive-stack architecture that integrates hardware, software, and compound AI. It also unveiled its latest high-performance robotics processor for industrial AMRs and advanced full-size humanoids, dubbed the Qualcomm Dragonwing IQ10 Series, for transforming prototypes into deployable, intelligent machines. It has entered into a strategic collaboration with NEURA Robotics. NEURA is driving leading-edge innovation in the field of robotics. The company aims to bring a general-purpose humanoid robot to market with human-like cognitive capabilities. In this venture, NEURA will gain access to Qualcomm’s robotics processors, including the Dragonwing IQ10 Series, physical AI acceleration and software stack, and connectivity platforms.
In the quarter under review, Qualcomm inked a comprehensive agreement with Hyundai to co-develop next-generation solutions for Software-Defined Vehicle (SDV) and Advanced Driver Assistance Systems (ADAS). It had also extended its collaboration with Garmin with the addition of the Nexus automotive-grade High Performance Compute (HPC) platform. Powered by Qualcomm’s Snapdragon Elite Platform for automotive, Nexus will integrate multiple vehicle domains, such as in-vehicle infotainment, instrument clusters and ADAS, into a single system for optimal efficiency. Strategic collaboration with industry leaders and innovative product launches are likely to have a positive impact in the second quarter results.
However, Qualcomm’s growth prospects are affected by memory supply shortages. Memory suppliers are redirecting capacity. Companies like Samsung and Micron are allocating more production to high-bandwidth memory to support the expanding AI data center market. This means less supply for mobile DRAM (Dynamic Random Access Memory). Amid such supply uncertainty, smartphone makers are witnessing higher costs due to the price hike of DRAMs. Premium smartphones are still a major revenue earner for Qualcomm. If OEMs slow down smartphone production owing to this situation, this may significantly affect Qualcomm’s top-line growth in the near term.
Moreover, growing geopolitical unrest worldwide can also impact its operations. Fluctuations in energy prices and supply chain issues stemming from the war in the Middle East could drive up logistics expenses and the price of critical components. This could impact margins.
Price Performance
Over the past year, Qualcomm has gained 0.8% compared with the industry’s growth of 121.9%, lagging competitors like Intel Corporation (INTC - Free Report) and Broadcom Inc. (AVGO - Free Report) . While Broadcom had gained 119.6%, Intel surged 302.4% 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’s shares currently trade at 13.48 forward earnings, lower than 33.54 for the industry and the stock’s mean of 16.51.
Image Source: Zacks Investment Research
Investment Considerations
Qualcomm is affected by aggressive competition in the mobile chipset market. Despite its effort to expand into other high-growth markets such as Robotics and automotive, the company still relies significantly on premium-tier handset demand for both chip sales and licensing revenues. Moreover, revenue concentration is tied to a few large OEMs such as Samsung and some Chinese smartphone manufacturers. The slowdown in the premium smartphone demand due to macro headwinds will directly hit its profits. Shortage of mobile DRAM remains a major concern in the near term.
Owing to growing geopolitical volatility, inflation and supply chain issues, several OEMs are moving toward designing chips in-house. This transition towards vertical integration by customers can significantly impact its top-line growth. Qualcomm has been facing challenges from low-cost chip manufacturers like MediaTek and Rockchip, as well as handset manufacturers' SoC projects such as Exynos by Samsung. To reduce its dependence on the smartphone market, the company has been expanding into the AI PC domain. However, Intel and AMD remain major players in that space, which is hindering Qualcomm’s growth initiatives. Broadcom remains a major competitor in the connectivity and radio frequency chip domain.
The company also has extensive operations in China. OEMs based in the communist nation are largely pulling back on new 4G device orders and managing their inventory in advance for the transition to 5G. Consequently, Qualcomm expects a significant impact on device shipments as sell-in and sell-through growth rates realign and channel inventory levels are drawn down in China.
End Note
Qualcomm is affected by fierce competition across several verticals. DRAM price hike, memory shortage, and supply chain issues will likely strain margins in the near term. Its customers’ push toward vertical integration remains a headwind. High dependence on the Chinese market is a concern. As U.S.- China related tensions grow, the market share of domestic Chinese chipmakers is growing. Declining earnings estimates show dwindling investors’ confidence in the stock’s growth potential. Owing to these factors, it might be prudent to avoid the stock at the moment.