Diversification delivers in Q3 FY2025, but market confidence lags for Qualcomm

Overview

Qualcomm delivered a strong Q3 FY2025 performance, driven by continued growth in automotive and IoT, as well as sustained demand in handset markets. The company highlighted its leadership in AI processing, energy-efficient computing, and advanced connectivity, which are central to its long-term diversification strategy.

“Another quarter of strong growth in QCT Automotive and IoT revenues further validates our diversification strategy and confidence in achieving our long-term revenue targets. Our leadership in AI processing, high-performance and low-power computing and advanced connectivity positions us to become the industry platform of choice as AI gains scale at the edge”, said Cristiano Amon, President and CEO of Qualcomm Incorporated.

Q3 FY2025 vs. Q3 FY2024:

• Revenue reached to $10.37bn (+10% YoY), reflecting strong QCT performance across Handsets, IoT, and Automotive.
  • QCT (Qualcomm CDMA Technologies) delivered $8.99bn in revenue (+11% YoY), with EBT of $2.67bn and a 30% margin. Growth was broad-based, with Automotive and IoT revenues up 23% year-over-year combined, while Handsets grew 7% amid stable premium device demand.
  • QTL (Qualcomm Technology Licensing) generated $1.32bn in revenue, with EBT of $942 million and a 71% margin, benefiting from stable licensing revenues and high-margin royalty streams.
  • Automotive achieved record revenue of $984m (+21% YoY), driven by adoption of Snapdragon Ride platforms in next-generation ADAS and connected vehicle programs.
  • IoT revenue reached $1.68bn (+24% YoY), supported by industrial and consumer device demand, including edge AI applications.
• GAAP EPS was $2.43 (+29% YoY), supported by higher revenue and improved profitability.
• Non-GAAP EPS rose to $2.77 (+19% YoY), driven by strong operating leverage and higher EBT margins.
• Net income grew to $2.67bn (+25% YoY), reflecting operational strength and disciplined expense management.
• Operating cash flow reached $10.02bn, supporting $3.8bn in capital returned to shareholders through dividends and share repurchases.

Qualcomm reaffirmed its full-year 2025 outlook, maintaining a confident view of its growth trajectory. For Q4 FY2025, the company expects revenue between $10.3bn and $11.1bn, with non-GAAP EPS projected at $2.75 to $2.95, reflecting sustained margin strength. For the fiscal year, non-GAAP EPS is anticipated to grow 16% year-over-year, driven by robust performance in Automotive and IoT segments, expanded opportunities in AI, and disciplined operating expense management. Additionally, management reiterated its commitment to returning 100% of free cash flow to shareholders in FY2025 through dividends and accelerated share repurchases, underscoring confidence in the company’s long-term strategy.

Qualcomm (QCOM) has seen a notable decline recently, with the stock continuing its bearish trajectory after its latest performance updates. The share price has fallen sharply in the past week, reflecting heightened selling pressure, and remains well below both its 50-day and 200-day moving averages, confirming a strong downward trend. Year-to-date performance is deeply negative, emphasizing ongoing investor concerns over the company’s outlook, while the RSI is hovering in oversold territory, suggesting the stock may be due for short-term volatility or a potential technical rebound. Overall, Qualcomm continues to struggle under significant market pressure, with its persistent downtrend presenting a major headwind for recovery.

Author: Andreea-Roxana Danci