Key Takeaways:
- Qualcomm’s fiscal first-quarter licensing revenue missed expectations, contributing to a nearly 4% drop in its share price.
- Apple, a major licensee of Qualcomm’s technology, is expected to bring a portion of its iPhone portfolio in-house later this year, raising concerns for Qualcomm’s licensing business.
- The anticipated smartphone upgrade cycle that would benefit Qualcomm may be over a year away, according to analysts.
Qualcomm’s shares fell Thursday after the company reported fiscal first-quarter results that raised concerns about its licensing business, especially with key partners like Apple and Huawei. Qualcomm’s licensing division, which licenses its patented technologies to companies including Apple, reported lower-than-expected revenue. This has sparked worries among investors, as analysts at JPMorgan indicated that Apple plans to shift a portion of its iPhone technology development in-house, a move expected later this year. Analysts also cited the expiration of Qualcomm’s licensing deal with Huawei as another limitation on revenue growth.
Despite overall sales reaching a record high in the first quarter and surpassing Wall Street estimates, Qualcomm’s licensing revenue disappointed, sending shares down by nearly 4% to $169.32. JPMorgan analysts expressed concerns about factors outside Qualcomm’s control, leading them to lower their price target for the company to $195 from $200 while maintaining an “overweight” rating.
Citi analysts noted that a major smartphone upgrade cycle, which would boost Qualcomm’s business, could still be over a year away due to the absence of a “killer app” driving new device sales. They reiterated a “neutral” rating and a $185 price target.
In contrast, Bank of America remains optimistic about Qualcomm’s future, maintaining a bullish $245 price target. The bank pointed to Qualcomm’s leadership in smartphone technologies and its efforts to diversify into other areas, such as automotive modems and chips for laptops. Additionally, Qualcomm has grown its share with Apple’s competitor, Samsung, supplying chips for its upcoming Galaxy S25 devices.
Despite Thursday’s dip, Qualcomm’s stock has gained over 14% in the past year, reflecting overall optimism about the company’s long-term prospects.
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