Qualcomm and Arm see momentum in AI, but smartphone weakness weighs on both stocks
Shares of the chipmakers Qualcomm Inc. and Arm Holdings Plc were trading lower after-hours today after warning of sluggish demand in the smartphone industry due to rising prices relating to the cost of key components such as memory chips.
Qualcomm reported third-quarter earnings that fell just short of Wall Street’s expectations, and while it beat on revenue, its management warned that it’s going to have to take strong measures to protect its profit margins going forward. This includes a decision to raise prices across the board starting September 1, and looking for new ways to protect its supply chain.
“Cost went up, so prices are going to go up,” said Qualcomm Chief Executive Cristiano Amon (pictured) in a conference call with analysts.
The smartphone chipmaker just reported earnings before certain costs such as stock compensation of $2.21 per share, trailing Wall Street’s forecast of $2.23 per share. Revenue for the quarter came to $9.95 billion, ahead of the $9.67 billion estimate. For the current quarter, Qualcomm said it’s forecasting earnings of between $2.05 to $2.25 per share on sales of between $9.7 billion and $10.5 billion, but that’s below the Street’s target of $2.36 per share in earnings and $10.02 billion in sales. Qualcomm’s stock was down just over 3% on the report as investors digested what the forecast means.
