Qualcomm stock price has suffered a harsh reversal in the past few days as the recent excitement about its new AI chips waned. QCOM was trading at $172.85, down by 16% from its highest level this year. So, will the stock rebound after earnings?
Qualcomm to showcase AI progress
Qualcomm, one of the biggest semiconductor companies globally, will publish its financial results after the market closes on Wednesday.
These results will be important because they come a few days after the company unveiled A1200 and AI250 chips for data centers. AI200 will be a low-cost alternative to existing solutions, while AI250 will have advanced features to help in the AI inference technology.
Therefore, these results will have the management talk about these products and issue guidance on revenue and profitability as it takes on top companies in the industry.
Also, they will talk about the recent Arduino acquisition that is also aimed at accelerating its AI features. It also acquired Alphawave in a $2.4 billion deal to boost its AI capabilities.
The results also come after China launched an investigation into the company as the trade war with the US continued. Chinese regulators are investigating its planned buyout of Autotalks, a company that makes vehicle-to-everything communication chips.
QCOM earnings preview
Data compiled by Yahoo Finance shows that the average revenue estimate is $10.76 billion, up by 5% from the $10.2 billion it made in the same period last year. Its earnings-per-share is expected to come in at $2.87, higher than the previous $2.69.
Analysts expect that its full-year revenue will be $43.5 billion, up by 11% from a year earlier. This growth will be fueled by the Qualcomm CDMA Technologies (QCT).
The most recent results showed that its third-quarter revenue grew by 10% to $10.4 billion, with the QCT figure rising by 11% to $9 billion. Its Qualcomm Technology Licensing (QTL) revenue rose by 22% to over $2.7 billion, driven by key areas like handsets, IoT, and automotive.
The company has benefited from its long-standing partnership with top companies like Xiaomi, Samsung, and OPPO. Its other products are used by top companies like BMW, Mercedes-Benz X and Honda.
One thing about Qualcomm is that its stock is not all that expensive. It has a GAAP forward price-to-earnings ratio of 18, much lower than the sector median of 32. It is trading at a significant bargain compared to other companies like Nvidia and AMD.
Qualcomm stock price technical analysis
QCOM stock chart | Source: TradingView
The daily timeframe chart shows that the QCOM stock price has pulled back in the past few days, moving from a high of $206 to the current $172.
It has crashed below the key support level at $174.53, its swing on September 24. It remains above the 50-day Exponential Moving Average (EMA).
Therefore, the stock will likely rebound after earnings, potentially to the psychological level at $200. On the flip side, a move below the support at $167, the 50-day moving average, will invalidat the bullish view.
The post Will the Qualcomm stock price rise or fall after its earnings? appeared first on Invezz