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Why Qualcomm Stock Dropped Today

Shares of Qualcomm (QCOM -4.98%) fell 5% on Thursday despite stronger-than-expected quarterly results and solid forward guidance from the semiconductor giant.

On Qualcomm’s strong start to the fiscal year

For its fiscal first quarter of 2024 (ended Dec. 24, 2023), Qualcomm’s adjusted (non-GAAP) revenue grew 5% year over year to $9.922 billion, translating to a 16% increase in adjusted net income to $3.101 billion, or $2.75 per share. Analysts, on average, were only modeling earnings of $2.37 per share on revenue of $9.52 billion.

Qualcomm CEO Cristiano Amon noted the quarterly results exceeded the high ends of Qualcomm’s own guidance.

“Looking ahead, we are building on this momentum with our leading Snapdragon platforms and technology differentiation in connectivity, computing, and on-device generative AI across handsets, automotive, PC, XR, and industrial [Internet of Things],” he said. 

What’s next for Qualcomm shareholders?

For its current fiscal second quarter of 2024, Qualcomm says revenue is expected to arrive in the range of $8.9 billion to $9.7 billion, which should translate to adjusted earnings per share of $2.20 to $2.40. By contrast, most analysts were looking for fiscal Q2 earnings of $2.25 per share — slightly below the midpoint of guidance — on revenue of roughly $9.3 billion.

It’s worth noting, of course, that shares of Qualcomm have rallied nearly 35% since mid-October — so perhaps investors are taking advantage of its in-line guidance to take some of their quick profits off the table. In any case, with a dividend yielding 2.3% at today’s prices and apparent strong momentum underlying its various market verticals, this pullback might well prove to be a solid buying opportunity for patient, long-term shareholders.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Qualcomm. The Motley Fool has a disclosure policy.

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