What Happened:
Shares of wireless chipmaker Qualcomm (NASDAQ:QCOM) jumped 5.65% in the morning session after the company reported fourth quarter results with revenue, adjusted operating profit, and EPS exceeding expectations. The strong topline performance was driven by strength in the handset and automotive segments. Management added that growth in the handset segment is benefitting from the early stages of recovery in Android demand. We were also glad next quarter's revenue and EPS guidance came in higher than Wall Street's estimates, especially when we've noticed weaker guidance among its semiconductor peers. On the other hand, its gross margin decreased. Zooming out, we think this was still a decent quarter, showing that the company is staying on track.
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What is the market telling us:
Qualcomm's shares are somewhat volatile and over the last year have had 11 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago, when the stock gained 9.29% on the news that the company announced an agreement with Apple to provide Snapdragon® 5G Modem-RF Systems for smartphone releases in 2024, 2025, and 2026. Qualcomm is the leading supplier of 5G modems, and this deal with Apple further cements its position in the market. Analysts have been concerned that Apple might be increasingly moving towards in-house production of some of its chipsets, which could have hurt Qualcomm's business. However, this deal shows that Apple is still committed to using Qualcomm's modems, which is a positive sign for investors.
Qualcomm is up 9.87% since the beginning of the year, but at $117.86 per share it is still trading 14.9% below its 52-week high of $138.46 from January 2023. Investors who bought $1,000 worth of Qualcomm's shares 5 years ago would now be looking at an investment worth $1,860.
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