QCOM Q1 Earnings Call: AI, Automotive, and IoT Drive Revenue Above Expectations

Wireless chipmaker Qualcomm (NASDAQ: QCOM) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 16.9% year on year to $10.98 billion. The company expects next quarter’s revenue to be around $10.3 billion, close to analysts’ estimates. Its non-GAAP profit of $2.85 per share was 1% above analysts’ consensus estimates.

Is now the time to buy QCOM? Find out in our full research report (it’s free).

StockStory’s Take

Qualcomm’s first quarter results were shaped by ongoing expansion in its handset, automotive, and IoT (Internet of Things) segments, with management emphasizing the growing adoption of AI (artificial intelligence) across these areas. CEO Cristiano Amon noted that the company’s technology leadership and product breadth, particularly in premium Android smartphones and automotive digital platforms, contributed to revenue gains, while new partnerships and product launches in edge AI and smart devices added to momentum.

Looking ahead, management’s guidance reflects both optimism and caution, citing potential headwinds from macroeconomic uncertainty and evolving global trade policies, including tariffs. CFO Akash Palkhiwala explained that guidance incorporates current expectations around tariffs, stating, “There is uncertainty around the impact of the global trade landscape on demand across our businesses.” The company aims to offset these risks by advancing its AI-enabled platforms and expanding in non-handset markets such as automotive, PCs, and industrial IoT.

Key Insights from Management’s Remarks

Qualcomm’s management attributed the quarter’s outperformance to strong product demand and successful execution in multiple end markets, while also highlighting key strategic investments and partnerships.

• AI Platform Expansion: Management emphasized the rapid adoption of smaller, on-device generative AI models, with Snapdragon platforms running several new AI models from industry leaders. This trend is expected to enable new applications and drive demand for Qualcomm’s edge computing solutions.
• Automotive Pipeline Growth: The automotive segment saw 59% year-over-year growth, underpinned by new design wins—including advanced driver-assistance systems (ADAS)—and expanded collaborations with automakers such as Nio and Zeekr. Leadership cited digital cockpit and ADAS content as primary growth drivers.
• IoT Industrial Upswing: Management highlighted notable performance in industrial IoT, attributed to a shift from microcontrollers to more advanced microprocessors with AI capabilities. Strategic acquisitions of Edge Impulse and FocusAI are intended to further strengthen Qualcomm’s AI and analytics offerings at the edge.
• Premium Android Handset Momentum: The Snapdragon 8 Elite platform continued to gain traction, with 90 flagship Android smartphone designs and growing demand in the premium tier—especially in China where subsidies boosted higher-end device sales. Management described this as an ongoing multi-year trend.
• PC and XR Expansion: Snapdragon-based PCs and smart glasses (XR) are expanding, with more than 85 PC designs in development and over 750 native applications now running on Snapdragon X. Management believes these categories are moving toward broader adoption as AI use cases mature.

Drivers of Future Performance

Management’s outlook for the coming quarters centers on expanding AI integration across devices, increased diversification outside traditional handsets, and close monitoring of macroeconomic and trade dynamics.

• AI as a Revenue Catalyst: Management believes that the proliferation of on-device AI will drive adoption of Qualcomm’s platforms in smartphones, PCs, automotive, and IoT, with expectations for increased content per device and new use cases.
• Automotive and Industrial Growth: Ongoing investment in the automotive digital chassis and industrial IoT platforms—supported by recent acquisitions—are viewed as significant contributors to mid-term revenue and margin growth.
• Tariff and Macro Uncertainty: The company acknowledged risks from tariffs and fluctuating demand in global markets, stating that guidance factors in current trade impacts but noting that conditions remain dynamic and could present further challenges.

Top Analyst Questions

• Joshua Buchalter (TD Cowen): Asked about assumptions regarding handset market guidance and the impact of tariffs; management said guidance reflects current tariff impacts but no material order pull-ins have been seen.
• Samik Chatterjee (JPMorgan): Inquired about drivers of IoT outperformance and acquisition strategy; management pointed to industrial sector strength and a focus on scaling AI capabilities through targeted acquisitions.
• Timothy Arcuri (UBS): Questioned China market trends amid tariffs and competition; management said premium device demand is expanding and no meaningful loss of design wins has occurred.
• Stacy Rasgon (Bernstein): Probed reasons for slight decline in chipset gross margins; management attributed this to product mix between lower and higher tiers rather than structural issues.
• Ross Seymore (Deutsche Bank): Asked about the impact of declining share at a major U.S. customer on operating expenses; management said investment is being shifted from handsets toward automotive and IoT growth areas while maintaining cost discipline.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the pace of AI feature adoption and design wins in new device categories, (2) the trajectory of automotive and industrial IoT revenue following recent product launches and acquisitions, and (3) any changes in global trade policy or tariffs that could affect supply chains or demand. Execution on expanding PC and XR platform partnerships will also be a key indicator of Qualcomm’s ability to diversify its revenue base.

Qualcomm currently trades at a forward P/E ratio of 12.8×. In the wake of earnings, is it a buy or sell? Find out in our free research report.

Our Favorite Stocks Right Now

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.