Qualcomm Inc. shares rallied in Wednesday’s extended session after the chipmaker’s record quarterly results and strong outlook beat Wall Street estimates and the company reassured analysts that demand continues to exceed supply.
Qualcomm QCOM, +1.20%, expects third-quarter adjusted earnings of $2.75-$2.95 per share on revenue of $10.5-11.3 billion, according to those polled by FactSet Analysts estimated $2.64 per share on sales of $10.02 billion.
While some analysts fear chip inventories are rising and supply shortages are nearing an end, Qualcomm chief executive Cristiano Amon dismissed those concerns on a conference call, saying continued strong demand is factored into the company’s guidance.
“We will still have more demand than supply across all businesses,” Amon told analysts.
A big driver of those sales comes from the company’s core handset business, which posted strong gains in the second quarter and which Akash Palkhiwala, Qualcomm’s chief financial officer, told MarketWatch in an interview as the company’s so-called “mature” business.
For example, cell phone chip sales rose 56% year over year to $6.34 billion, compared to $5.91 billion for The Street. Mobile phone sales are part of Qualcomm’s CDMA Technologies or QCT segment.
“Not only are we gaining market share, which is what we’ve been doing in particular at Samsung, where they’ve chosen to use our chip instead of their own internal chip [their Galaxy S22 smartphone]’ Palkhiwala told MarketWatch. “We’re also gaining share in terms of content…chips are becoming more complex and fewer and fewer people are making these chips, and that’s good for us.”
The company is forecasting QCT revenue of $9.1 billion to $9.6 billion in the third quarter and revenue from Qualcomm’s technology licensing, or QTL, segment of $1.4 billion to $1.6 billion. Analysts had forecast QCT revenue of $8.44 billion and QTL revenue of $1.51 billion.
In fact, CEO Amon expects Samsung to continue to favor Qualcomm’s Snapdragon chip over its own internal chip for its high-end phones.
“In many of these markets, which are now new markets for Qualcomm, Samsung is actively promoting Snapdragon as an ingredient brand for the Galaxy S22,” Amon told analysts. “I think that’s a very important data point… I think we’re very confident that the relationship with Samsung will continue to be a long-term relationship for us.”
Qualcomm shares were up more than 6% after the close, after gaining 1.2% in the regular session, to close at $135.10.
Read: Why semiconductor stocks are ‘almost uninvestable’ despite record gains amid global tightening
The company reported net income of $2.93 billion, or $2.57 per share, for the second quarter, compared to $1.76 billion, or $1.53 per share, in the same period last year. The chipmaker reported adjusted earnings, which excludes stock-based compensation expense and other items, of $3.21 per share, compared to $1.90 per share in the year-ago period. Total revenue increased to a record $11.16 billion in the second quarter from $7.94 billion in the same period last year.
Analysts estimated earnings per share at $2.95 based on Qualcomm’s guidance of $2.80 to $3 per share and revenue at $10.63 billion based on Qualcomm’s revenue guidance from $10.2 to $11 billion.
RF front-end sales increased 28% to $1.16 billion versus $1.12 billion expected, and autochip sales increased 41% to $339 million versus estimate $282.4 million from Street, and Internet of Things, or IoT, revenue rose 61% to $1.72 billion versus Street View’s $1.61 billion.
Qualcomm reported QCT revenue of $9.55 billion, up 52% year over year. Analysts had put it at $8.9 billion based on the company’s guidance of $8.7 billion to $9.3 billion. QCT includes handset, RF, car and IoT chips.
QTL segment revenue declined 2% to $1.58 billion in the first quarter, but still beat Wall Street’s estimate of $1.55 billion based on the company’s forecast of 1, $45 to $1.65 billion.
Over the past 12 months, Qualcomm shares are down 2.1%, compared to a 10.3% decline in the PHLX Semiconductor Index SOX, -0.49%, a 12% decline in the S&P 500 index SPX, +0.21% and down 11.4% tech-heavy Nasdaq Composite Index COMP, -0.01%.