Qualcomm gives better-than-expected revenue forecast as company pushes AI-powered smartphones

Qualcomm reported second-quarter earnings on Wednesday that surpassed Wall Street expectations, and provided a strong guide for the current quarter.

Shares rose about 3% in extended trading.

Here's how it did versus LSEG consensus estimates for the quarter ending in March:

Net income during the quarter was $2.33 billion, or $2.06 per share, versus $1.7 billion, or $1.52 per share, in the year-earlier period.

Qualcomm said it expected between $8.8 billion and $9.6 billion in sales in the current quarter, higher than Wall Street expectations of $9.05 billion. Analysts were looking for earnings guidance of $2.17 per share, versus the company's forecast of between $2.15 and $2.35.

Qualcomm's most important business is its handsets business. It sells processors, modems and other parts for smartphones — primarily Android devices, but also some modem parts in iPhones.

Handset sales rose 1% year-over-year to $6.18 billion, signaling that the smartphone market may be recovering after a few years of post-covid slumping. Qualcomm called out strong demand for "premium tier" smartphones that require the most advanced chips, especially in China. Qualcomm said that revenue from Chinese phone makers increased 40% on an annual basis during the quarter.

Qualcomm calls the phones that use its best chips "AI-powered smartphones," citing features such as generative email completion, live translation, and virtual assistants that use the chips specialized "NPU" AI section. One such phone is Samsung's Galaxy S24 Ultra, which launched earlier this year.

The company's automotive business, which sells chips to automakers, also showed signs of growth, rising 35% on an annual basis to $603 million. The company's so-called "Internet of Things" business —