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Qualcomm Surges 6% in After-Hours Trading After Beating Estimates

By Will Healy – Apr 28, 2021 at 4:57PM

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Year-over-year revenue growth exceeded 50% for the third consecutive quarter.

Qualcomm (QCOM -1.17%) spiked higher in after-hours trading after announcing its second-quarter earnings. The San Diego-based chipmaker surged by about 6% as the company blew away analyst estimates.

Young woman smiling as she waves to someone on her smartphone while walking in the city.

Image source: Getty Images.

Revenue rose by 52% from year-ago levels to more than $7.9 billion. Wall Street analysts had expected $7.6 billion on a consensus basis. Generally accepted accounting principles (GAAP) net income came in at just under $1.8 billion, rising by 276% over the same period. Because Qualcomm limited the growth of operating expenses to 21%, it more than doubled its operating income. Higher interest and investment expenses in the year-ago quarter also helped Qualcomm increase its percentage income gain.

"Demonstrating the strength of our strategy and our success in execution, we delivered another quarter of year-over-year growth driven by sustained demand for smartphones globally and our ability to increase the scale of our non-handset revenues," said CEO Steve Mollenkopf.

Today marks the final earnings report before Mollenkopf retires on June 30 and Qualcomm president Cristiano Amon takes over. Amon led the company's 5G strategy, bringing a focus that could bolster Qualcomm's edge in 5G. This latest global wireless standard has become critical as revenue began to surge toward the end of last year right after Apple released its first 5G iPhone. This marks the third consecutive quarter when revenue growth has exceeded 50%.

Despite optimism about 5G, Qualcomm would only release its outlook one quarter ahead. This could point to uncertainty as more Americans return to offline activities as the country reopens.

Nonetheless, the third-quarter revenue estimate of between $7.1 billion and $7.9 billion would bring revenue growth ranging from 45% to 62% compared to the same quarter last year. Moreover, Grand View Research forecasts a compound annual growth rate (CAGR) for the smartphone chipset industry of 69% through 2028. Thus, a near-term slowdown will likely not last.

Qualcomm stock has risen by about 90% over the last 12 months.

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Will Healy has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple and Qualcomm. The Motley Fool recommends the following options: long March 2023 $120.0 calls on Apple and short March 2023 $130.0 calls on Apple. The Motley Fool has a disclosure policy.

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