Qualcomm Stock Drops After Its Earnings Beat. Here's Why

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Qualcomm (QCOM) stock fell out of the gate Thursday even as the integrated circuits specialist beat top- and bottom-line expectations for its fiscal 2025 first quarter and issued a better-than-expected forecast for its fiscal second quarter.

In the three months ending December 29, Qualcomm's revenue increased 17.5% year over year to $11.7 billion. Its earnings per share (EPS) rose 24% from the year-ago period to $3.41.

"We are very pleased to have achieved quarterly revenue records, which reflect the strength of our technology, product roadmap and end-customer demand," said Qualcomm CEO Cristiano Amon in a statement. "We are delivering growth across our diversification initiatives and remain committed to executing on our fiscal 2029 targets to achieve $22 billion of non-handset revenues."

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The results handily beat analysts' expectations. Wall Street was anticipating revenue of $10.9 billion and earnings of $2.96 per share, according to CNBC.

For the second quarter of this fiscal year, Qualcomm expects to achieve revenue in the range of $10.2 billion to $11 billion and earnings between $2.70 to $2.90 per share. The midpoints of these ranges, revenue of $10.6 billion and earnings of $2.80 per share, came in ahead of the $10.3 billion in revenue and earnings of $2.69 per share that analysts are anticipating.

As for why the tech stock is falling, some media outlets are reporting to disappointing licensing revenue of $1.54 billion, which came in slightly below what Wall Street was expecting.

Where does Qualcomm stand with analysts?

Qualcomm has tracked the performance of the broader market over the past 12 months, up 24.5% on a total return basis (price change plus dividends) vs the S&P 500's 24.3% gain. And Wall Street sees even more upside for the semiconductor stock.

According to S&P Global Market Intelligence, the average analyst target price for QCOM stock is $202.12, representing implied upside of more than 20% to current levels. Additionally, the consensus recommendation is a Buy.

However, not everyone is so upbeat toward the large-cap stock. Financial services firm Oppenheimer, for one, has a Perform rating (equivalent to a Hold) on QCOM.

"While we recognize QCOM's leading position in modem and single-chip integrated chipset solutions, we believe the company is over-exposed to the mobile market, with its diminishing growth and increasing competition," says Oppenheimer analyst Rick Shafer. "We believe both sides of the business face structural issues with no clear solution in sight. The stock should remain under pressure until it is able to diversify toward stickier, more profitable markets."

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.