Qualcomm QCOM shares are down 5% since its fiscal first quarter report final Wednesday, and have now fallen almost 20% yr to this point.
Regardless that 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 International Reminiscence Chip Scarcity
Qualcomm has emphasised that reminiscence chip shortages are hurting smartphone demand, which instantly impacts its core handset processor enterprise.
The corporate has warned that unique gear producers (OEMs) are pulling again on orders on account of reminiscence constraints, which is anticipated to weigh on gross sales within the close to time period.
Whereas traders love upstream suppliers throughout a scarcity that may elevate costs, resembling 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 over the past 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 information facilities has diverted reminiscence provide away from smartphones, inflicting OEM manufacturing delays and forcing Qualcomm to decrease its steering.
Though Qualcomm has AI information heart endeavors of its personal, smartphone manufacturing continues to be its largest income supply. Till there’s a decision to the reminiscence chip scarcity, it would not be shocking if there’s extra volatility forward for Qualcomm inventory.
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QUALCOMM Integrated (QCOM) : Free Inventory Evaluation Report
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