The stock market bears will be wondering whether we're seeing air coming out of the bubble, as chipmaker values continue to slide, and as, increasingly, the sector's C-Suite continues to put emphasis on AI data centers which, in case you haven't been paying attention, are not exactly flavor of the month.
In Thursday's session, it was Qualcomm's turn to be pulled across the coals by traders, after Wednesday night's earnings report revealed the decline in the Snapdragon owner's core business of putting powerful and fast chips in smartphones, and as the parent company talked up the data center business.
Executive talking points cited 'supply issues' as the culprit, and claimed that Qualcomm was impacted by an industry-wide scarcity of memory.
Thus, Qualcomm shares fell as much as 11% earlier on Thursday, and, later in the trading day, at $158.17, the Nasdaq stock was down 8.6% for the session.
A disappointing quarter
The chipmaker's fiscal fourth-quarter handset revealed that revenue had dropped 26% year-on-year to $5.14 billion, missing a $5.21 billion consensus estimate in the market.
The San Diego-based technology supplier reported total quarterly revenue of $10.44 billion, up 8% from a year earlier, with adjusted earnings of $2.17 per share, ahead of the $2.16 per share Wall Street had forecast on sales of $10.48 billion.
Qualcomm's chip division, reported as QCT, fell 8% to $9.02 billion, with handsets still making up the majority of that segment even as the drop weighed on the total.
Chief executive Cristiano Amon attributed the weakness to supply constraints rather than falling demand, telling analysts "it's a supply issue" tied to a global memory shortage, and said Qualcomm "saw the memory shortage coming and prepared for it early."
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Global smartphone shipments fell 20% in the September quarter to a 14-year low, according to Counterpoint Research, a decline that has squeezed chip suppliers across the industry.
Data center chips
Qualcomm's data-center business, central to its push beyond handsets, generated $650 million in the quarter, still small against the scale of the handset decline.
The company previously guided to roughly $5 billion in data-center revenue next fiscal year, up from about $300 million this year, as it expands custom hyperscale silicon and AI inference accelerators for hyperscaler customers.
For the current quarter, Qualcomm guided to adjusted earnings of around $2.25 per share at the midpoint on revenue of $10.48 billion, guidance investors read as soft against expectations for continued growth.
