As Qualcomm prepares to drop its fiscal Q2 2024 earnings report, there are a few key areas investors will be laser-focused on to gauge the company’s increasingly multi-pronged growth strategy.
Front and center is likely to be Qualcomm’s surging automotive business, division saw a staggering 35% year-over-year revenue jump last quarter, crossing the $600 million mark. Even more impressive: Qualcomm’s pipeline of automotive design wins has ballooned to a massive $45 billion for its Snapdragon car platforms. If that momentum keeps up, over $4 billion in annual auto revenue could be on the table by 2026, not too shabby for its big diversification push.
Of course, Qualcomm’s bread-and-butter handset business will remain squarely in the spotlight, while revenue was flat year-over-year at $6.2 billion last quarter, a recovering Chinese market could provide a tailwind. The company is projecting a 40% jump in first-half 2024 handset sales compared to 2023, not to mention premium chips like the Snapdragon 8cx Gen 3 still bringing in juicyhigh-margin revenue.
Real intrigue may lie in that ambiguously named “IoT” segment that encapsulates everything from WiFi and XR to PCs and AI. While revenue dropped 11% last quarter, there are some compelling storylines for a major rebound.
AI PC, WiFi 7 and XR Could Be Catalysts to Watch
Ramp of next-gen WiFi 7 is expected to provide an IoT tailwind, recently announced opening of Meta’s VR Horizon OS platform to third-parties like Qualcomm could drive a new wave of XR design wins too. Most tantalizing of all may be the Snapdragon X Elite and X Plus AI PC chips slated for late next quarter that could help Qualcomm grab a bigger slice of the burgeoning AI computing market.
Speaking of which, while investors seem bullish on Qualcomm’s AI and automotive prospects, they’ll likely want more clarity on when exactly that next major revenue growth driver – its AI PC processors – will start showing up in the financials. Early 2025 is the current expectation, but who knows? Perhaps the earnings call brings a welcome surprise on that front too.
All in all, it’s shaping up to be a pivotal quarter for Qualcomm as it navigates established markets while seizing on generational technology shifts in AI, automotive, and beyond. Investors will be watching intently for any clues on how that high-wire balancing act is playing out.
