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Qualcomm's stock fell 7% after the company warned of weaker-than-expected smartphone sales due to a global memory shortage, despite exceeding revenue estimates in data center and automotive segments.

Qualcomm Stock Plummets 7% on Weak Earnings Outlook Amid Memory Shortage

Qualcomm reported quarterly revenue of $10.44 billion, slightly above the $10.48 billion Street estimate, but issued a cautious earnings forecast. CEO Cristiano Amon cited rising memory costs as the primary drag on smartphone sales, which dropped 26% to $5.14 billion. The company highlighted strong growth in automotive chips, with annualized revenue surging 89% to $1.99 billion, and data center revenue hitting $650 million. IoT revenue rose 4% year-over-year to $1.88 billion, while QTL licensing revenue declined 7% to $1.3 billion.

Investors reacted to the weak smartphone outlook, which could pressure demand as handset makers raise prices. Qualcomm’s shift toward data centers and automotive chips positions it for long-term growth, with a $5 billion revenue target for fiscal 2027. However, risks remain if memory shortages persist, potentially delaying smartphone recovery. The company’s expansion into AI infrastructure and a recent SpaceX deal could bolster its data center ambitions.

Stakeholders face mixed outcomes: smartphone manufacturers may see reduced demand, while data center clients and automotive developers benefit from Qualcomm’s diversified revenue streams. The memory shortage underscores the company’s vulnerability to supply chain disruptions, though its growth in AI and automotive sectors offers resilience against sector-specific volatility.

Uncertainties persist around the memory shortage’s duration and whether Qualcomm can meet its $5 billion data center revenue goal. The company’s engagement with a global hyperscaler and optical connectivity customer signals ongoing strategic bets on emerging technologies.

Qualcomm plans to provide technology for SpaceX’s cellular rollout and aims to achieve $5 billion in data center revenue by fiscal 2027. It has also signed a customer for optical connectivity and engaged a global hyperscaler.

Qualcomm’s stock drop reflects investor caution over smartphone challenges, but its data center and automotive growth areas offer long-term potential.

Topics: Technology, Finance, Qualcomm, Earnings Report, Memory Shortage, Data Center, Automotive, Stock Market

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Source: CNBC