(Bloomberg) — Qualcomm (QCOM) Inc., the largest maker of smartphone processors, became the latest chipmaker to deliver an upbeat forecast and still leave investors underwhelmed.
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Though the company’s sales and profit forecasts handily topped Wall Street estimates on Wednesday, its stock slipped as much as 3% in the following day’s trading.
It’s become a familiar story. Advanced Micro Devices Inc. also failed to impress investors with a strong revenue outlook this week. The company — Nvidia Corp.’s closest competitor in the market for artificial intelligence computing components — was coming off an AI-fueled rally that set expectations at stratospheric levels. Micron Technology Inc. fit the same pattern with its latest report in September.
Though Qualcomm has been less of an AI darling on Wall Street, it did enjoy a stock resurgence in recent weeks. That may have set the bar too high, Jay Goldberg, an analyst at Seaport Global Securities, said on Bloomberg Television.
“People were expecting some bigger upside,” he said.
The company’s profit also suffered from a US tax change last quarter. Qualcomm took a $5.7 billion writedown in period, which contributed to a $3.12 billion net loss. Other tech companies have recently reported hefty one-time charges from tax adjustments, including Meta Platforms Inc.
Still, the change will pay off in the long run, Qualcomm said. The company will use the alternative minimum tax, with a stable rate of 13% to 14%. The rate would have gone up without the shift, Qualcomm said.
Sales will be roughly $12.2 billion in the fiscal first quarter, which runs through December, the company said. Profit will be about $3.40 a share, minus certain items. Analysts had estimated revenue of $11.6 billion and earnings of $3.26 a share.
The outlook suggests that demand remains strong in the high-end Android phone market, which generates much of Qualcomm’s revenue. At the same time, Chief Executive Officer Cristiano Amon is working to transform the company into a more diversified seller of chips for cars, personal computers and data centers. And that effort is showing signs of paying off.
Profit was $3 a share when excluding some items in the fourth quarter, which ended Sept. 28. Analysts had estimated $2.88 a share. Revenue rose 10% to $11.3 billion, topping the $10.8 billion projection.
