Qualcomm (QCOM, Financial) exceeded 4Q24 EPS and revenue forecasts, driven by a recovering smartphone market, particularly in the high-end segment, and robust automotive business growth. The company is also leveraging AI-related growth opportunities through its Snapdragon 8 series chips, launching Gen-AI enabled PCs and laptops. With strong momentum in its Handsets, IoT, and Automotive sectors, Qualcomm provided an optimistic outlook for 1Q25, with EPS and revenue projections surpassing expectations.
Key Highlights:
- Qualcomm's strategy focuses on diversifying end markets and revenue streams, with the handset market comprising about 60% of total revenue. In Q4, handset revenue increased by 12% year-over-year to $6.09 billion, reflecting a recovering smartphone market. The company's premium-tier Snapdragon 8 Elite platform drove over 20% Android revenue growth, particularly in China, its largest market.
- For 1Q25, Qualcomm anticipates a mid-single-digit revenue increase in handsets, with China remaining a strong contributor as revenue from Chinese OEMs soared by 40% sequentially.
- Qualcomm's IoT business rebounded with a 22% revenue growth to $1.68 billion, following year-over-year declines in the previous three quarters of FY24. Increased demand for AI-enabled PCs helped overcome an inventory glut. The company launched the Snapdragon X Plus 8-core platform, enhancing its X Series lineup to 58 platforms.
- Automotive revenue surged by 68% year-over-year to $899 million, with a 50% growth forecast for 1Q25. This growth is driven by ADAS and self-driving technologies. Qualcomm introduced Snapdragon Cockpit Elite and Snapdragon Ride Elite platforms for assisted driving functionalities.
Overall, Qualcomm's diversification strategy yielded significant results in Q4, with all business segments showing solid growth. While the potential loss of Apple (AAPL, Financial) as a customer poses a long-term risk, Qualcomm's expanding presence in the PC/laptop market could mitigate this, especially if a strong PC upgrade cycle occurs with new AI features.
