What Happened?

Shares of wireless chipmaker Qualcomm (NASDAQ:QCOM) fell 6.2% in the morning session after the company reported fourth-quarter results with Wall Street raising concerns about competition from Huawei and the potential loss of its Apple business. 

The quarter itself was good as sales and earnings topped Wall Street forecasts, and the company issued a stronger-than-expected outlook for the next quarter. But analysts warned of bigger problems ahead. 

Morgan Stanley analyst Joseph Moore highlighted Huawei's rising market share in China, which threatens Qualcomm's key customers. He also expects a slight decline in Qualcomm's automotive business. Wells Fargo analyst Aaron Rakers pointed to a 10% quarter-over-quarter decline in handset revenue, driven by seasonal trends and lower Apple shipments. Rakers continued, "The iPhone SE 4, expected in March, will use Apple's in-house modem, reinforcing Qualcomm's loss of Apple handset revenue. Meanwhile, the company dismissed concerns that near-term handset demand was artificially boosted by pre-tariff pull-forward." 

During the earnings call, Qualcomm said it expects QCT handset revenue to dip next quarter due to "seasonality and shipments to Apple." 

Overall, the stock's reaction suggests investors are looking past short-term gains and focusing instead on long-term risks to Qualcomm's growth.

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What The Market Is Telling Us

Qualcomm’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 9 months ago when the stock gained 10% on the news that the company reported strong first quarter results that exceeded analysts' EPS expectations. Next quarter's revenue guidance came in higher than Wall Street's estimates. On the other hand, its inventory levels increased. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic.

Qualcomm is up 9.4% since the beginning of the year, but at $168.53 per share, it is still trading 25.8% below its 52-week high of $227.09 from June 2024. Investors who bought $1,000 worth of Qualcomm’s shares 5 years ago would now be looking at an investment worth $1,854.

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