Qualcomm QCOM shares are down 5% since its fiscal first quarter report final Wednesday, and have now fallen practically 20% yr thus far.
Although Qualcomm exceeded quarterly expectations, its steering got here in beneath Wall Road’s estimates, attributed to the well-documented reminiscence chip scarcity.
Regardless of document Q1 gross sales, a cautious tone surrounding the scarcity from Qualcomm’s administration has weighed on investor sentiment and analysts’ outlook for the inventory.
Triggering a Zacks Rank #5 (Robust Promote), Qualcomm is experiencing an unfavorable pattern of declining EPS revisions, and lands the Bear of the Day.
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The World Reminiscence Chip Scarcity
Qualcomm has emphasised that reminiscence chip shortages are hurting smartphone demand, which immediately impacts its core handset processor enterprise.
The corporate has warned that authentic gear producers (OEMs) are pulling again on orders as a consequence of reminiscence constraints, which is predicted to weigh on gross sales within the close to time period.
Whereas traders love upstream suppliers throughout a scarcity that may elevate costs, reminiscent of storage and flash-chip reminiscence suppliers, like Sandisk SNDK and Western Digital WDC, they usually keep away from downstream element suppliers within the provide chain, like Qualcomm, which designs processors and modems that go into the completed units.
In different phrases, upstream suppliers promote the scarce useful resource; downstream suppliers rely on it.
Weak Steerage & Declining EPS Revisions
Qualcomm’s Q2 income steering of $10.2–$11 billion missed the consensus estimates of $11.1 billion. Extra regarding, Q2 EPS steering of $2.45–$2.65 was effectively beneath the Zacks Consensus of $2.85.
Suggesting extra draw back danger forward is that during the last 30 days, Qualcomm’s fiscal 2026 and FY27 EPS estimates have now dropped over 7%, following a noticeable decline within the final week.
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Backside Line
Mockingly, skyrocketing demand for AI knowledge facilities has diverted reminiscence provide away from smartphones, inflicting OEM manufacturing delays and forcing Qualcomm to decrease its steering.
Though Qualcomm has AI knowledge heart endeavors of its personal, smartphone manufacturing remains to be its largest income supply. Till there’s a decision to the reminiscence chip scarcity, it would not be shocking if there may be extra volatility forward for Qualcomm inventory.
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QUALCOMM Integrated (QCOM) : Free Inventory Evaluation Report
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This text initially revealed on Zacks Funding Analysis (zacks.com).
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.
