Qualcomm Stock Drops Pre-Market As Licensing Forecast Overshadows Q1 Earnings Beat: Retail Sentiment Remains Strong

Qualcomm Inc. (QCOM) stock fell over 4% in pre-market trading on Thursday, despite beating first-quarter earnings estimates. The drop followed Qualcomm’s cautious outlook for patent licensing revenue, which the company expects to remain flat in the near term.

The chip designer reported earnings of $3.41 per share, exceeding Wall Street’s forecast of $2.96 per share. 

Revenue came in at $11.67 billion, surpassing analysts’ expectations of $10.91 billion and marking an 18% increase from the same period last year. 

Net income rose 15% year-over-year to $3.18 billion from $2.77 billion.

For the March quarter, Qualcomm projected revenue between $10.2 billion and $11 billion, with the midpoint of that range slightly above the Koyfin consensus estimate of $10.49 billion. 

The company also guided adjusted earnings per share (EPS) between $2.70 and $2.90, with the midpoint exceeding Wall Street’s estimate of $2.78 per share.

Despite the earnings beat, Qualcomm’s forecast for licensing revenue dampened investor sentiment. 

“I think our overall assumption on the market is that it is either flat or grows low single digits on a year-over-year basis. Now of course, this doesn't take into account upside opportunities in terms of the China subsidy and the AI replacement rate,” said CFO Akash Palkhiwala during the earnings call, as per Koyfin’s transcript.

The company had previously benefited from a licensing agreement with Huawei, even after ceasing chip sales to the Chinese telecom giant. Analysts estimated that the agreement contributed between $0.10 and $0.15 per share to Qualcomm’s profits.

"The Huawei discussions are still in play, so the numbers don't actually include the potential from a renewal with Huawei," said Alex Rogers, Qualcomm's licensing chief, when addressing the forecast.

Meanwhile, Qualcomm’s fastest-growing segment is its automotive division, which saw revenue surge 61% to $961 million. 

Despite the market’s pessimism, retail sentiment around Qualcomm on Stocktwits edged higher into the ‘extremely bullish’ zone accompanied by ‘extremely high’ levels of chatter. 

Users on the platform are confident that the stock’s price will make a comeback by end of day given that its earnings beat.

ARM recently notified Qualcomm that it was withdrawing its Oct. 22, 2024, notice of breach and indicated that it has no current plan to terminate the Qualcomm architecture license agreement.

“We're excited to continue to develop performance-leading world-class products that benefit consumers worldwide that include our incredible Oryon custom CPUs,” said Qualcomm CEO Christiano Amon during the earnings call.

Qualcomm's stock price has rallied 14% so far in 2025, outperforming a gain of about 3% in the S&P 500.

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