Qualcomm Inc.'s stock plunged around 5% in the pre-market trading session despite reporting record quarterly revenue and profits that exceeded analysts' expectations. The semiconductor giant's strong performance was overshadowed by its disappointing forecast for flat revenue growth in its lucrative patent licensing business, raising concerns among investors.
The company's fiscal first-quarter revenue hit a record $11.7 billion, up 17% annually, beating estimates of $10.93 billion. Earnings per share (EPS) also surpassed expectations, coming in at $3.41. However, Qualcomm's outlook for its patent licensing business, under which makers of 5G-connected products pay the company a fee for its technology, dampened investor sentiment.
During the earnings call, Qualcomm executives revealed that the company's licensing business revenue would not see any growth this year after an agreement with Huawei Technologies expired. Shares declined 5% after the results and executive comments, as investors had been anticipating a more robust payoff from the company's exposure to the growing artificial intelligence (AI) market.
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