Pre Q2 Earnings: Is QCOM Stock a Portfolio Must-Have?

Qualcomm Incorporated QCOM is scheduled to report second-quarter fiscal 2025 earnings on April 30, 2025. The Zacks Consensus Estimate for revenues and earnings is pegged at $10.64 billion and $2.82 per share, respectively. Over the past 60 days, earnings estimates for QCOM for fiscal 2025 have improved from $11.64 per share to $11.85 and for fiscal 2026 from $12.43 per share to $12.61.

QCOM Estimate Trend

Earnings Surprise History

The chip manufacturer delivered a four-quarter earnings surprise of 7.8%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 16.4%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Earnings Whispers

Our proven model predicts an earnings beat for Qualcomm for the fiscal second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. 

Qualcomm currently has an ESP of +0.86% with a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Shaping the Upcoming Results

With the accelerated rollout of 5G technology, Qualcomm is benefiting from investments toward building a licensing program in mobile. The company is well-positioned to meet its long-term revenue targets, driven by solid 5G traction, greater visibility and a diversified revenue stream. The company intends to harness artificial intelligence (AI) to meet increased demands for essential products and services that are the building blocks of digital transformation in a cloud economy. Qualcomm envisions solid growth opportunities within the mobile space, driven by the strength of its Snapdragon portfolio.

During the fiscal second quarter, Qualcomm launched the Snapdragon X chip for mid-range AI (artificial intelligence) desktops and laptops. This SoC (system-on-chip) is the fourth such product in the Snapdragon X processor line, following the successful launch of the Snapdragon X Plus 8-core, Snapdragon X Plus and Snapdragon X Elite series. Based on a 4-nanometer process, the Snapdragon X chip comprises an 8-core Oryon central processor, a graphics component and a neural processing unit (NPU). The NPU accelerates AI workloads, offering 45 TOPS (trillions of operations per second), making it an ideal platform to power Copilot+PCs – Microsoft Corporation’s MSFT vision of AI-first, flagship Windows hardware. 

In the fiscal second quarter, Qualcomm announced that Samsung, one of the major smartphone manufacturers in the world, deployed the Snapdragon 8 Elite Mobile Platform for its S25, S25 Plus and S25 Ultra devices. The advanced chip features the Qualcomm FastConnect 7800 Mobile Connectivity system and the Snapdragon X80 5G Modem-RF System, which ensure blazing fast 5G and WiFi 7 speeds. Qualcomm also extended its Snapdragon G Series portfolio with the addition of next-generation gaming chipsets. The 2025 product lineup includes Snapdragon G3 Gen 3, Snapdragon G2 Gen 2 and Snapdragon G1 Gen 2 chips. These initiatives are likely to be reflected in the upcoming results.

Price Performance

Over the past year, Qualcomm has lost 12.2% against the industry’s growth of 9.1%, lagging peers like Hewlett Packard Enterprise Company HPE and Broadcom Inc. AVGO. While Broadcom has gained 43.6%, Hewlett Packard declined 5.5% over this period.

Key Valuation Metric

From a valuation standpoint, Qualcomm appears to be relatively cheaper compared to the industry and below its mean. Going by the price/earnings ratio, the company shares currently trade at 12.09 forward earnings, lower than 24.06 for the industry and the stock’s mean of 17.35. 

Investment Considerations

Qualcomm is one of the largest manufacturers of wireless chipsets based on baseband technology. The company is focusing on retaining its leadership in 5G, the chipset market and mobile connectivity with several technological achievements and innovative product launches. It is likely to help users experience a seamless transition to superfast 5G networks, delivering low-power, resilient multi-gigabit connectivity with unprecedented range and Qualcomm's best-in-class security. This, in turn, offers the flexibility and scalability needed for broad and fast 5G adoption through accelerated commercialization by OEMs. 

The company is reportedly the only chipset vendor with 5G system-level solutions spanning both sub-6 and millimeter wave bands and one of the largest RF (radio frequency) front-end suppliers with design wins across all premium-tier smartphone customers. Leveraging the technology roadmap for a focused approach to innovation, it aims to connect millions of devices to the ‘connected intelligent edge.’ 

In addition, solid growth opportunities within the mobile space led by innovations in the Snapdragon portfolio for premium-tier Android handsets and a firmer footing in the emerging market of driver-assistance technology with the Snapdragon Ride Advanced Driver Assistance Systems portfolio are tailwinds.

End Note

With solid fundamentals and healthy revenue-generating potential driven by robust demand trends, Qualcomm appears to be a solid investment proposition. It also looks cheaper relative to the industry. Further, a strong emphasis on quality, diligent execution of operational plans and continuous portfolio enhancements are driving more value for customers. With improving earnings estimates, the stock is witnessing a positive investor perception.

Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed to record solid quarterly earnings. Hence, investors are likely to profit if they bet on this high-flying stock now.

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This article originally published on Zacks Investment Research (zacks.com).

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