Qualcomm Shares Tumble on Weak Sales Outlook

Qualcomm's stock experienced a significant drop, falling around 9% in extended trading after the company issued a revenue forecast lower than anticipated by analysts. The projected revenue for the current quarter is between $10.2 billion and $11 billion, with an estimated earnings per share of $2.55, excluding certain items. This falls short of the average analyst estimates of $11.2 billion in revenue and $2.89 per share.

The primary concern highlighted by Qualcomm is the impact of component shortages, specifically memory chips, which are driving up prices and limiting the production of smartphones by its customers. Although demand for high-end phones remains strong, some clients, particularly in China, are expected to produce fewer units due to these supply constraints. CEO Cristiano Amon acknowledged the near-term challenges from these industry-wide issues.

Despite efforts to expand into new markets like automotive, personal computers, and data center chips, these emerging businesses have not yet compensated for the shortfall in the core smartphone sector. The company's fiscal first-quarter results, which ended December 28, showed sales increased 5% to approximately $12.3 billion, with phone-related revenue slightly below estimates. Qualcomm is also venturing into AI data center components, aiming to challenge dominant players, with initial shipments expected next year.