Here’s what Wall Street is saying about Qualcomm ahead of earnings

Qualcomm (QCOM) is scheduled to report results of its fiscal second quarter after the market closes on May 1 with a conference call scheduled for 4:45 pm ET. What to watch for:

GUIDANCE: Along with its last report, Qualcomm guided for Q2 adjusted earnings per share of $2.20-$2.40 on revenue of $8.9B-$9.7B. At the time, analysts were expecting the company to report Q2 EPS of $2.25 on revenue of $9.3B, but those figures have since dropped to $2.17 and $8.71B, respectively.

HSBC UPS PT: Earlier this week, HSBC raised the firm’s price target on Qualcomm to $190 from $170 and maintained a Buy rating on the shares. The analyst expects above-consensus fiscal Q2 results from Qualcomm and possible upside to Q3 guidance given its high-end smartphone mix. The firm believes the company’s premium segment leadership should drive outperformance.

RECENT INITIATIONS: Last week, Benchmark initiated coverage of Qualcomm with a Buy rating and $200 price target. As a “wireless industry leader,” the firm believes Qualcomm is “particularly well positioned to capitalize” on the industry’s trends of shifting AI computational inferencing workloads to the very edges of the network. The company is leveraging its strengths in wireless connectivity and computing to “lead the market in the ramp of GenAI smartphones and AI-PCs,” with both likely sparking long-term replacement cycles in their respective markets, the analyst told investors in the research note.

The Benchmark coverage followed Evercore ISI initiating coverage of Qualcomm with an In Line rating and $177 price target. On the negative side, the firm views it as “a Cellphone Era play” with limited unit growth potential with about 80% of Qualcomm’s revenues from handset markets via licenses and chipsets. However, on the positive side, Qualcomm has been among IoT processing vendors and is looking to expand the total addressable market by offering processing solutions to new markets such as Automotive, IoT and PC, adds the firm, which looks to get more constructive with visibility into success in these emerging markets.

UP AND DOWN: On April 11, Bernstein raised the firm’s price target on Qualcomm to $200 from $170 and kept an Outperform rating on the shares. While Generative AI has been the talk of the town for more than a year, the potential of AI at the edge is now gaining momentum as both companies and investors start to think through how these new technologies might ultimately get deployed to the masses, the firm said at the time. Bernstein believes Qualcomm can potentially take center stage with that narrative as it leverages a heterogeneous computing architecture to run AI applications on edge, coupled to a well-thought-out ecosystem strategy with full-stack software including frameworks and runtimes, libraries, system software, broad OS support, and developer tools. The firm continues to like the story.

That same day, meanwhile, JPMorgan placed Qualcomm on “Negative Catalyst Watch” into the earnings report. The firm said it has yet to see any significant change in the fundamentals for the smartphone market with the recovery expected to “remain muted” in 2024. Additionally, recent data relative to the smartphone market in China also raises concerns around limited underlying recovery, despite a robust outcome for Q4 of 2023, the analyst told investors in a research note. Qualcomm shares are up 20% year-to-date, which may set up the stock for disappointment, contends JPMorgan, which kept an Overweight rating on the name with a $170 price target.