After ending FY24 on an upbeat note, where’s Qualcomm headed next?

Qualcomm, Inc. (NASDAQ: QCOM) is busy transforming itself from a wireless communication solutions provider into a connected computing company, to better serve customers in the AI era. The tech firm reported double-digit revenue and earnings growth for the fourth quarter, driving the stock sharply higher on Wednesday evening.

After withdrawing from its mid-year peak, Qualcomm’s stock has traded nearly flat in recent months. In the past three months, the shares gained around 10%. The better-than-expected Q4 results and strong first-quarter guidance added to the positive investor sentiment this week.

Healthy Cash Flow

The company generated a record-high free cash flow of $11 million in the fiscal year ending September 2024. The board of directors approved an impressive $15 billion in additional share repurchases, complementing its long-time strategy of returning cash to shareholders through dividends and share buybacks. Being a leading supplier of smartphone processors, the company benefits from the rapid growth of the mobile industry across markets.

It is worth noting that Qualcomm’s Handsets division, which mainly includes smartphone chips, accounted for about 60% of total revenues in the fourth quarter. Recently, the company unveiled its high-end processor for Android — Snapdragon 8 Elite, which is touted as the world’s fastest mobile chip.

Strong Q4

Fourth-quarter net income rose to $2.92 billion or $2.59 per share from $1.49 billion or $1.32 per share in the corresponding quarter of 2023. Adjusted profit increased to $2.69 per share from $2.02 per share a year earlier. Revenues advanced 19% from last year to $10.2 billion in Q4. Revenue from the CDMA Technologies division grew 18% and Technology Licensing revenue rose 21% year-over-year. Both profit and the top line beat estimates, continuing the trend that started more than a year ago.

“Our differentiated technology and product road maps lead in every industry in which we now participate, and we are very optimistic about the edge AI momentum across our business. As such, we will continue to transform Qualcomm from a wireless communications company into a connected computing company for the age of AI. In the current environment, more than ever, we remain extremely focused on executing our strategy and targets while maintaining operating discipline and creating value for our stockholders,” Qualcomm’s CEO Cristiano Amon said during his post-earnings interaction with analysts.

Guidance

For the first quarter of 2025, the Qualcomm leadership forecasts revenues in the range of $10.5 billion to $11.3 billion, which is above analysts’ consensus estimates. It projects adjusted earnings per share between $2.85 and $3.05 for the December quarter – the midpoint of the EPS outlook exceeds Wall Street’s forecast. The guidance for unadjusted earnings is in the $2.39-$2.59 per share range.

Continuing its retreat from the post-earnings highs, Qualcomm’s stock traded lower for most of Thursday’s session. The shares are up 20% since the beginning of the year.