UBS Group AG: Qualcomm (QCOM.US) Q2 performance is expected to meet expectations, but guidance may be weak.

Qualcomm (QCOM.US) will announce its financial results for the second quarter of fiscal year 2025 after the US stock market closes on April 30th. UBS Group AG suggests that Qualcomm may announce second-quarter results that are in line with expectations, but due to the uncertainties the company is facing, their guidance may be relatively weak. Analysts at UBS Group AG stated in a report, "We expect Qualcomm's results to be in line with expectations, but given the impact of tariffs and macroeconomic headwinds on global smartphone demand, we anticipate that the company's guidance for the third quarter ending in June will be below typical seasonal levels, with a sequential decline in the low single-digit percentage (market expectations are for a 2% decline)." The analysts noted, "Actual sales of iPhones in the first quarter of 2024 were weaker than expected, and the recent release of the iPhone SE by Apple Inc. using their 'C1' modem may replace some of Qualcomm's modem orders. However, considering that this device only accounts for about 10% of iPhone sales, the impact is limited to at most a few tens of million dollars, so it is not significant." The analyst also mentioned that Qualcomm generates about 75% of its mobile revenue from the Android camp in the past 12 months, and the sales performance of Android devices has been mixed, with some markets showing signs of slowing momentum, but Samsung's Galaxy S25 is a bright spot. He further pointed out, "Samsung re-adopting Qualcomm Snapdragon chips in the Galaxy S25 can at least partially mitigate the softness we expect in Qualcomm's Android business in the coming months or quarters. In addition, the continued shift of consumer preference toward premium flagship phones also benefits Qualcomm, given their high market share in this segment." Regarding the PC business, Qualcomm's shipment volume for the third quarter ending in June is expected to increase by 5% sequentially, maintaining their market share in the PC market at about 1.8%. However, due to the significant slowdown in sales of Qualcomm's Elite X products, coupled with increasing competition from AMD and Intel Corporation products, substantial progress for Qualcomm in this market may take a "considerable amount of time." In conclusion, the analyst stated, "Overall, we remain cautious as Qualcomm's ancillary businesses will still struggle to offset its losses for a long period of time in the face of declining smartphone business. Additionally, considering that about 66% of Qualcomm's revenue comes from China, the smartphone business also faces uncertainties related to tariffs."